Quick answer: Healthcare professionals and locums in the UK can reduce their tax bill by claiming professional fees such as GMC, NMC, and HCPC registration and royal college subscriptions. Other routes include uniform and travel expenses, using NHS pension contributions and the £60,000 annual allowance wisely, choosing the right working structure for locum income, and keeping digital records for Making Tax Digital, which started in April 2026 for self-employed income over £50,000. Locums should also set aside money for Self Assessment payments on account and check IR35 status on every NHS engagement. An accountant who understands healthcare can make sure nothing is missed.
Doctors, nurses, dentists, pharmacists, paramedics, and allied health professionals often have some of the most complicated tax affairs of any profession. Many combine salaried NHS work with locum shifts, private practice, agency work, or medico-legal reports. Each income stream comes with different tax rules, different allowable expenses, and different deadlines. It is no surprise that many healthcare workers overpay tax or miss reliefs they are entitled to.
This guide sets out the most useful tax tips for healthcare professionals and locums for the 2026/27 tax year, which runs from 6 April 2026 to 5 April 2027. If you would rather hand the paperwork to a specialist, our Self Assessment tax return service is built for busy professionals with multiple income sources.
Understand How You Are Taxed
The first step is knowing which category your income falls into, because this decides how you pay tax and which expenses you can claim.
Salaried employees in NHS trusts, private hospitals, and practices are taxed through PAYE. Tax and National Insurance are deducted before you are paid, and you claim certain work expenses through your tax code or a Self Assessment return.
Self-employed locums work as sole traders, invoice for their shifts, and pay income tax and Class 4 National Insurance through Self Assessment. Locum GPs commonly work this way.
Limited company locums provide their services through their own company, usually paying themselves a mix of salary and dividends. This route is affected by IR35 rules, especially in the NHS.
Umbrella company workers are employees of an umbrella company that deducts PAYE tax before paying them. This is common with agency nurses and some locum doctors.
Many healthcare professionals fall into more than one category at the same time, for example a salaried hospital doctor who also does self-employed locum shifts. If your total income from all sources needs reporting, you will usually need to file a Self Assessment return.
Tip 1: Claim Your Professional Fees and Subscriptions
This is the most commonly missed relief in healthcare. HMRC allows tax relief on annual fees paid to approved professional bodies, including GMC, NMC, HCPC, GDC, and GPhC registration, as well as memberships such as the BMA, RCN, and royal colleges. HMRC publishes the full list of approved organisations on its List 3 of professional bodies.
Employees can claim through HMRC’s professional fees and subscriptions relief, and you can usually backdate claims for up to four previous tax years. Self-employed locums deduct these fees as business expenses in their accounts. For a higher rate taxpayer, relief on a few hundred pounds of fees each year adds up to a meaningful saving.
Tip 2: Claim Uniform and Laundry Costs
If you wear a uniform and wash it at home, you may be entitled to a flat-rate allowance for laundering it. HMRC sets fixed amounts for many healthcare roles, including nurses, healthcare assistants, midwives, therapists, and ambulance staff, and you can claim without keeping receipts. Details are on the government’s uniforms, work clothing and tools guidance. Like professional fees, this can usually be backdated for up to four years.
Tip 3: Claim Travel Correctly
Travel is a major cost for locums, but the rules are strict. Ordinary commuting between home and a permanent workplace is not tax deductible. Travel to temporary workplaces, which covers many locum shifts, can be.
If you use your own car for qualifying business journeys, you can claim HMRC’s approved mileage rates of 45p per mile for the first 10,000 miles and 25p per mile after that. Train fares, parking at temporary sites, and reasonable subsistence on qualifying trips may also be claimable. Keep a simple mileage log with the date, destination, purpose, and miles for every journey. It is the first thing HMRC asks for if it ever checks your claim.
Tip 4: Know Which Other Expenses Locums Can Claim
Self-employed locums can deduct costs incurred wholly and exclusively for their work. Common allowable expenses include:
- Medical indemnity and defence organisation subscriptions
- Professional registration, college, and BMA fees
- Medical equipment such as stethoscopes and diagnostic tools
- CPD courses and conferences that maintain or update existing skills
- Medical journals, textbooks, and clinical software subscriptions
- Accountancy fees and locum agency or chambers fees
- A proportion of mobile phone and home office costs used for work
Training that gives you a brand new qualification, such as a first specialty exam, is generally treated differently from courses that keep your existing skills up to date. HMRC’s guide to expenses if you are self-employed sets out the general rules. If you are unsure whether a cost qualifies, ask before you claim it.
Tip 5: Check Your Tax Code, Especially on Rotation
Rotating junior doctors and healthcare workers who change trusts or work for several employers are often put on emergency tax codes. These can lead to overpaid tax for months at a time. Check every payslip for your tax code and contact HMRC if it looks wrong. If you have overpaid, you can reclaim the difference, and an accountant can review previous years for errors.
Tip 6: Understand IR35 for NHS Locum Work
IR35, also called the off-payroll working rules, applies when you work through your own limited company but would be treated as an employee if you were engaged directly. NHS trusts and other public sector bodies are responsible for deciding your IR35 status and must give you a Status Determination Statement.
If a role is assessed as inside IR35, tax and National Insurance are deducted at source as if you were an employee, and many of the tax advantages of a limited company disappear. Always ask for the Status Determination Statement, read it, and challenge it through the client’s disagreement process if you believe it is wrong. HMRC’s off-payroll working guidance and its Check Employment Status for Tax tool explain how the rules work.
Tip 7: Choose the Right Structure for Locum Income
Many locums ask whether they should be a sole trader or set up a limited company. There is no single right answer, and the numbers have shifted in recent years.
| Factor | Sole Trader | Limited Company |
|---|---|---|
| Setup and admin | Simple, low cost | More admin, annual accounts, Companies House filings |
| How profits are taxed | Income tax plus Class 4 NIC | Corporation tax at 19% to 25%, then tax on salary and dividends |
| Dividend tax in 2026/27 | Not applicable | 10.75% basic rate, 35.75% higher rate, 39.35% additional rate |
| IR35 | Not applicable | Applies to NHS and public sector engagements |
| NHS pension access | Locum GPs can usually contribute | Often more limited |
| Privacy | Accounts not public | Accounts filed publicly |
Dividend tax rates rose by two percentage points at the basic and higher rates from April 2026, while the dividend allowance stayed at £500. Combined with IR35 in the NHS and higher employer National Insurance, this means a limited company is no longer automatically the cheaper option. The right choice depends on your income level, where you work, your pension plans, and whether your engagements fall inside or outside IR35. Our limited company accounts and corporation tax services can help you compare both routes using your real figures.
Tip 8: Make the Most of Your Pension
Pension contributions are one of the most tax efficient ways for healthcare professionals to save. Contributions to the NHS Pension Scheme receive tax relief at your highest rate of income tax. Eligible locum GPs can also contribute on their locum earnings using the scheme’s locum forms. The NHS Business Services Authority runs the scheme and publishes member guidance.
Be aware of the pension annual allowance, which is £60,000 for most people. Senior doctors and consultants with high earnings or large pay rises can exceed it. The tapered annual allowance can reduce it further for very high earners. If you exceed the allowance, a tax charge may apply, though the NHS scheme offers a “scheme pays” option to settle it from your pension. Ask for a pension savings statement each year and get advice before a promotion or major pay change.
Tip 9: Watch the £100,000 Income Trap
Once your adjusted net income goes above £100,000, you lose £1 of your £12,570 personal allowance for every £2 over that limit. Between £100,000 and £125,140, this creates an effective income tax rate of 60%. Consultants with private practice income and busy locums can easily cross this threshold. Extra pension contributions and Gift Aid donations reduce adjusted net income and can restore some or all of your personal allowance.
Tip 10: Prepare for Making Tax Digital
Making Tax Digital for Income Tax began in April 2026. It applies to sole traders and landlords whose qualifying income was above £50,000 in their 2024/25 tax return. Those affected must keep digital records using compatible software and send quarterly updates to HMRC, followed by a final year-end submission. The threshold is set to fall to £30,000 from April 2027 and £20,000 from April 2028, according to the Association of Taxation Technicians.
Many self-employed locums will already be in scope or will be soon. Moving to cloud accounting software now, connecting your bank feed, and photographing receipts as you go will make quarterly updates painless. Our bookkeeping services can set this up and handle your quarterly submissions for you.
Tip 11: Plan for Payments on Account
When you become self-employed or earn significant untaxed income, HMRC will usually ask you to make payments on account toward next year’s tax bill, on 31 January and 31 July. In your first year, this can mean paying one and a half years of tax in a single January, which catches many new locums out. A good habit is to move 25% to 40% of every locum payment into a separate savings account, depending on your tax band. HMRC explains how this works in its guide to payments on account.
Tip 12: Know Where VAT Fits
Most medical care provided by registered health professionals is exempt from VAT, so the majority of locums never need to register. Some work is different, however. Medico-legal reports, expert witness work, and certain non-clinical services can be standard-rated. If you do this kind of work and it exceeds the VAT registration threshold, you may need to register. Our VAT returns service can review whether any of your income is affected.
Tip 13: Do Not Forget Working From Home Changes
From April 2026, employees can no longer claim tax relief for working from home directly from HMRC in the way many did before. Salaried staff should check with their employer about any homeworking arrangements. Self-employed locums can still claim a reasonable proportion of home running costs for genuine business use, such as writing reports or completing admin at home.
Key Tax Deadlines for Healthcare Professionals
| Deadline | What Is Due |
|---|---|
| 5 October 2026 | Register for Self Assessment if you became self-employed in 2025/26 |
| 31 October 2026 | Paper Self Assessment return for 2025/26 |
| 31 January 2027 | Online Self Assessment return for 2025/26, balancing payment, and first payment on account for 2026/27 |
| 31 July 2027 | Second payment on account for 2026/27 |
| Quarterly from 2026/27 | Making Tax Digital updates for those in scope |
If you started locum work last year and missed the registration deadline, register as soon as possible to keep any penalties to a minimum. HMRC’s Self Assessment tax returns page has the full details.
How ATB Solutions Helps Healthcare Professionals
Healthcare work leaves little time for receipts and tax returns, and mistakes can be costly. ATB Solutions provides bookkeeping, payroll, VAT, corporation tax, annual accounts, and Self Assessment services with a clear, practical approach that keeps you compliant with HMRC requirements. Whether you are a salaried doctor with a few locum shifts, a full-time locum GP, or a nurse working through an agency, we can organise your records, claim every relief you are entitled to, and keep you ahead of Making Tax Digital.
Contact us today to book a consultation and take the stress out of your tax.
Frequently Asked Questions
Do locum doctors need to file a Self Assessment tax return?
Yes, in most cases. Self-employed locums and limited company directors must file a Self Assessment return. Salaried doctors with untaxed income above certain limits usually need one as well.
Can nurses claim tax back on their uniform?
Yes. Nurses and many other healthcare workers who wash their own uniforms can claim a flat-rate allowance from HMRC and can usually backdate the claim for up to four years.
Can I claim my GMC or NMC fee against tax?
Yes. GMC, NMC, HCPC, and other registration fees on HMRC’s approved List 3 qualify for tax relief, as do memberships such as the BMA, RCN, and royal colleges.
Is it better for a locum to be a sole trader or a limited company?
It depends on your income, your IR35 status, and your pension plans. Higher dividend tax rates from April 2026 and IR35 rules in the NHS mean a limited company is no longer automatically cheaper, so compare both with an accountant.
Does IR35 apply to NHS locum work?
Yes. NHS trusts decide the IR35 status of locums working through limited companies and must issue a Status Determination Statement. If the role is inside IR35, tax is deducted at source.
Does Making Tax Digital apply to locums?
It applies to self-employed locums whose qualifying income was over £50,000 in their 2024/25 return from April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028.
How much should a locum save for tax?
A practical rule is to set aside 25% to 40% of each payment, depending on your tax band. This covers income tax, National Insurance, and payments on account.
Can I claim mileage for locum shifts?
You can usually claim mileage for travel to temporary workplaces at 45p per mile for the first 10,000 miles and 25p per mile after that. Ordinary commuting to a permanent workplace is not claimable.
This article provides general information for the 2026/27 UK tax year and is not personal tax advice. Tax rules depend on individual circumstances and can change, so speak to a qualified accountant before making decisions.
