Locum doctor tax return 2026 planning is especially important for doctors across England and Wales because the 2025/26 Self Assessment tax return, due by 31 January 2027, covers one of the most financially complex tax years in recent memory. The combination of Making Tax Digital for Income Tax, employer NIC changes affecting locums operating through personal service companies, the DDRB 3.5% pay award, NHS pension contribution issues, dividend tax changes for incorporated locums, and ongoing IR35 scrutiny means locum doctors need to prepare their tax returns carefully and early.
This guide is the complete Self Assessment reference for locum doctors in 2026. It covers who needs to file, what income must be declared, which expenses are allowable, how the NHS pension interacts with your tax position, what has changed in 2026 that affects your return, the MTD obligations that now apply to many locums, and the specific pitfalls that cause locum doctors to overpay tax or trigger HMRC compliance checks. Whether you work as a sole trader locum, through a limited company, or have a combination of salaried NHS employment and locum income, this guide addresses your position.
Who Needs to File a Self Assessment Tax Return as a Locum Doctor
The starting point is confirming whether you need to file a Self Assessment return for 2025/26 at all. The answer is almost certainly yes if any of the following apply to you.
You must file Self Assessment if:
You received gross self-employment income from locum work during 2025/26. This applies whether you worked through an agency, directly for a GP practice or NHS trust, or through your own limited company as a sole trader.
Your total income from all sources exceeded £100,000 in 2025/26. At this level the personal allowance begins to taper, and the income must be declared through Self Assessment regardless of whether it was fully taxed at source through PAYE.
You received dividend income from a personal service company or any other company in 2025/26.
You received rental income from property.
You have an NHS pension annual allowance charge to declare covered in detail below.
You have income from investments, savings interest above the Personal Savings Allowance, or capital gains above the Annual Exempt Amount.
You received any untaxed income not covered by PAYE including private medical report fees, expert witness income, medicolegal work, or consultancy payments.
The critical point for locums with mixed income:
Many locum doctors have a combination of PAYE income from a salaried NHS post, a clinical fellowship, or any employed role and self-employment locum income. The PAYE income is taxed at source and in many cases the correct tax is deducted by the employer. But the self-employment income is not taxed at source it must be declared through Self Assessment and the tax paid by 31 January 2027. Even if your PAYE income is large relative to your locum income, you cannot ignore the Self Assessment obligation on the self-employment element.
Key Point: HMRC cross-references data from multiple sources including NHS payroll systems, NHSBSA payment records, and from April 2026 the quarterly MTD submissions of locums above the £50,000 threshold. A locum who has not registered for Self Assessment but whose locum income is visible in HMRC’s data systems will receive an automatic penalty notice. If you have not registered for Self Assessment and have locum income, register immediately at gov.uk/register-for-self-assessment. Our personal tax team can manage this process for you.
Understanding Your Income Sources: What Must Be Declared
The Self Assessment return for a locum doctor can involve multiple income sources, each of which is reported differently on the return and taxed in different ways. Getting the income reporting right is the foundation of an accurate return.
Self-Employment Locum Income
If you work as a locum through your own name invoicing directly or through an agency without a personal service company your locum income is self-employment income. It is reported on the self-employment pages of the SA100 return, with allowable expenses deducted to arrive at taxable profit. Income is recognised on an accruals basis the date the work was performed, not the date payment was received. If you did locum sessions in March 2026 that were paid in April 2026, that income belongs in your 2025/26 return.
Income from a Personal Service Company
If you operate through a limited company, your personal income from the company typically comprises salary (taxed through PAYE and reported on a P60) and dividends (taxed through Self Assessment). The company’s income and expenses are entirely separate from your personal return the company files its own corporation tax return. Your personal return declares only the salary and dividends you have drawn from the company, not the company’s gross turnover.
If your company has been assessed as inside IR35 for any engagements or if you are uncertain about your IR35 status additional care is needed in completing your return. As detailed in our IR35 guide for healthcare workers, income from inside-IR35 engagements is treated as deemed employment income and must be reported accordingly, with employment-level tax deducted.
PAYE Income from Salaried Employment
Any PAYE income from a salaried role whether as a sessional GP, a hospital doctor, a clinical fellow, or any other employed position is reported on your return using the figures from your P60. If you had multiple employments during the year, you need P60s from each employer. Check that the tax deducted on your P60 is correct HMRC’s PAYE system sometimes generates incorrect tax codes for doctors with multiple income sources, resulting in either underpayment or overpayment of tax throughout the year. Ou rpersonal tax specialists review tax codes for all locum doctor clients as a standard part of the return preparation process.
Private Practice and Medicolegal Income
Private consultation fees, medical report fees, expert witness income, occupational health income, and any other non-NHS clinical income are self-employment income reportable on the self-employment pages. If this income is paid through a company, it flows through the company and is drawn as salary or dividends as above. If it is paid directly to you personally, it must be declared as self-employment income with the associated allowable expenses deducted.
Dividend Income
From 6 April 2026, dividend tax rates increased by 2 percentage points across all bands. For 2025/26 returns being filed now, the old rates apply: basic rate 8.75%, higher rate 33.75%, additional rate 39.35%. The £500 dividend allowance applies the first £500 of dividend income is tax-free. As covered in our dividend tax guide, the 2026/27 return (filed by January 2028) will reflect the new higher rates. Plan your 2026/27 dividend strategy accordingly.
Rental Income
If you receive rental income from a property, this is declared on the UK property pages of the return. Allowable expenses include mortgage interest (subject to the restriction that limits relief to the basic rate for residential properties), letting agent fees, insurance, repairs, and other costs of running the property. If your property income combined with your self-employment income takes your total gross income above the MTD threshold, both income streams must be included in your quarterly MTD submissions from April 2026.
Savings and Investment Income
Interest income above your Personal Savings Allowance (£500 for higher rate taxpayers, £0 for additional rate taxpayers in 2025/26) must be declared. Capital gains above the Annual Exempt Amount (£3,000 in 2025/26) must be declared on the capital gains pages. If you disposed of any assets during 2025/26 including shares, investment property, or a personal service company the gain must be calculated and declared.
Allowable Expenses for Locum Doctors: What You Can Claim
Getting your expense claims right is one of the most valuable parts of the Self Assessment process for locum doctors. HMRC allows deduction of expenses that are wholly and exclusively incurred for the purposes of the trade. For locum doctors this covers a wide range of costs that, when correctly claimed, materially reduce the taxable profit on which income tax and Class 4 NIC are calculated.
Professional Registration and Indemnity
GMC registration fee and annual retention fee are fully deductible these are necessary costs of practising as a doctor in the UK and cannot be separated from the trade. Medical Defence Organisation (MDO) or other medical indemnity premiums are fully deductible as a necessary professional cost. BMA membership subscription is deductible where it relates to your professional practice rather than purely personal benefits.
Continuing Professional Development
CPD course fees, medical conference registration fees, and the direct costs of attending relevant clinical training events are deductible. The cost of travel to CPD events is deductible as a business travel cost. Subscription costs for clinical journals, medical reference software, and online professional development resources are deductible where they are used in the course of the locum work.
Travel and Mileage
Travel between your base and locum engagements is deductible but the rules on what counts as a base and what counts as ordinary commuting are important to understand. HMRC’s position is that travel from home to a temporary workplace which describes most locum assignments is deductible business travel. A locum doctor travelling from home to a GP surgery for a locum session, and then on to a second surgery, and then home, can claim the full journey as business mileage.
The approved mileage rate for 2025/26 is 45p per mile for the first 10,000 miles in a tax year and 25p per mile thereafter. Keeping a contemporaneous mileage log recording the date, start point, destination, purpose, and miles for every journey is essential. HMRC consistently scrutinises mileage claims and a locum without contemporaneous records is in a weak position if challenged. Our personal tax teamprovides clients with a mileage log template and reviews mileage claims as part of the return preparation.
Public transport costs for travel to locum engagements are deductible. Accommodation costs for locum engagements that require overnight stays away from home are deductible but only the portion that relates to the business purpose, not any personal element of the stay.
Equipment and Consumables
A medical bag and its contents stethoscope, sphygmomanometer, otoscope, ophthalmoscope, diagnostic instruments, and consumables are deductible as tools of the trade. Personal protective equipment used in clinical settings is deductible. A laptop or tablet used for clinical work, electronic prescribing, or accessing patient records during locum sessions is deductible though if it is also used for personal purposes a private use adjustment should be applied. Prescription pads and medical stationery are deductible.
Professional Software and Subscriptions
Clinical decision support software, drug reference applications (BNF subscriptions), telemedicine platform subscriptions used for locum work, and other software used exclusively or primarily for clinical work are deductible. If you use accounting software to manage your locum income and expenses which you must do if you are within the MTD mandate the subscription cost is deductible.
Home Office Costs
If you use a room at home for administrative work related to your locum practice writing reports, completing clinical paperwork, managing your invoicing and accounts a proportion of your home running costs is deductible. The most straightforward approach for most locum doctors is HMRC’s flat rate of £6 per week (£312 per year) for working from home, which requires no calculation of actual costs. If your home working is more substantial, the actual apportioned cost of heating, electricity, broadband, and insurance attributable to the work room may be higher but requires documentation.
Accountancy Fees
The cost of your accountant preparing your Self Assessment return, managing your MTD submissions, and providing tax advice in connection with your locum income is fully deductible as a business expense. This is one of the most straightforward deductions available the fee you pay Kudos to manage your tax affairs reduces the profit on which you pay tax.
What Cannot Be Claimed
Ordinary clothing including scrubs, white coats, or any clothing that could be worn outside of work is not deductible as it does not meet the wholly and exclusively test. Food and drink consumed during the working day is not deductible unless it is specifically related to a business meeting with no personal element. Travel from home to a permanent workplace a salaried post rather than a locum engagement is not deductible. Parking fines are not deductible. Private medical insurance premiums paid personally (as opposed to through a company) are generally not deductible for a sole trader.
National Insurance for Locum Doctors: Class 2 and Class 4
Self-employed locum doctors pay National Insurance in two forms, both of which must be understood and planned for.
Class 2 NIC
From 6 April 2024, mandatory Class 2 NIC was abolished for self-employed individuals. For 2025/26, locum doctors with profits above the small profits threshold of £6,845 are automatically treated as having paid Class 2 NIC they receive a notional credit that protects their entitlement to the State Pension and contributory benefits without any payment being required or collected.
Class 2 NIC is therefore no longer a cash cost for most locum doctors but it remains important from a State Pension protection perspective. Locum doctors whose profits fall below £6,845 in 2025/26 do not receive the automatic credit. If you are in this position and want to protect your State Pension record, you can make voluntary Class 2 contributions at £3.50 per week (£182 per year for 2025/26) to fill the gap. This is particularly relevant for locums in their early years of practice or those who have reduced their sessions significantly.
Important: Even though Class 2 NIC is no longer a mandatory payment, your Self Assessment return still requires you to confirm your self-employment profits so that HMRC can determine whether the automatic credit applies. Do not assume that abolition of mandatory Class 2 means you can omit self-employment income from your return the return obligation remains fully in place.
Class 4 NIC
Class 4 NIC is earnings-related and is calculated as a percentage of taxable profits. For 2025/26 the rates are 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270. Class 4 NIC is calculated automatically by your Self Assessment return based on your declared profits and remains a real cash cost that must be planned for.
Important interactionNHS pension contributions and NIC:
If you are a member of the NHS pension scheme as a locum through a GP practice’s employer link, your NHS pension contributions are deducted from your pensionable earnings but do not reduce your self-employment profit for Class 4 NIC purposes in the same way that they reduce income tax. This is a common source of confusion for locum doctors completing their own returns always check that the NIC calculation in your return software is treating pension contributions correctly
The NHS Pension and Your Tax Return: The Critical Interaction
The interaction between the NHS pension scheme and the locum doctor tax return is one of the most complex and most financially significant areas of locum tax planning. Getting it wrong in either direction has material financial consequences.
NHS Pension Contributions as a Tax Deduction
If you are an active member of the NHS pension scheme contributing through a GP practice or a designated NHS body your employee contributions reduce your taxable income. For a locum contributing 13.5% of pensionable earnings to the NHS pension, this is a significant deduction that materially reduces the income tax payable on your return. Ensure your pension contribution amounts are correctly entered on the return — a common error is failing to claim these contributions as they are sometimes obscured in complex payroll or agency payment arrangements.
The Annual Allowance Charge
If your NHS pension growth in 2025/26 exceeded your annual allowance £60,000 for most doctors, but potentially lower under the tapered annual allowance for higher earners you have an annual allowance charge to declare on your Self Assessment return. This charge is declarable by 31 January 2027 and payable either in cash or through the Scheme Pays mechanism.
For locum doctors with significant income from multiple sources PAYE salary, locum income, private practice, and potentially rental or investment income the risk of breaching the annual allowance is higher than for those with a single income source. The adjusted income threshold for the tapered annual allowance is £260,000. For a locum doctor whose threshold income (gross income minus employee pension contributions) exceeds £200,000, the tapered annual allowance begins to apply.
If you have received an annual allowance pension savings statement from NHSBSA, you must declare the charge on your return even if you intend to use Scheme Pays. The deadline for Scheme Pays elections is 31 July following the January payment deadline for 2025/26 charges, this is 31 July 2027. Our personal tax specialistswork with locum doctors specifically on annual allowance planning, carry forward calculations, and Scheme Pays elections to minimise the overall tax cost of NHS pension membership.
Carry Forward
If you have not used your full annual allowance in any of the three preceding tax years 2022/23, 2023/24, or 2024/25 you can carry the unused allowance forward to 2025/26 to offset any excess pension growth. For a locum doctor who joined the NHS pension scheme relatively recently, or who had lower earnings in prior years, carry forward can eliminate or significantly reduce an annual allowance charge. This calculation requires your pension savings statements for each of the three prior years and is one of the most valuable tax planning tools available to NHS doctors.
MTD for Income Tax: What Changed in April 2026 and What It Means for Your Return
Making Tax Digital for Income Tax became mandatory for locum doctors and other self-employed individuals with gross qualifying income above £50,000 from 6 April 2026. This is the most significant change to how locum doctors interact with HMRC in decades.
If your gross locum income (before expenses) plus any property income exceeded £50,000 in 2024/25:
You are within the Phase 1 MTD mandate from 6 April 2026. This means you must:
Maintain digital records of all income and expenses in MTD-compatible software not a spreadsheet, not paper records, not a folder of receipts.Submit quarterly updates to HMRC covering your income and expenses for each quarter of the 2026/27 tax year. The first quarterly update (covering 6 April to 5 July 2026) was due by 5 August 2026.
Submit a final annual declaration by 31 January 2028 this replaces the traditional SA100 Self Assessment return for the 2026/27 tax year.
The impact on your 2025/26 return (filed by January 2027):
The 2025/26 return is the last year in which most locums above the threshold will file using the traditional Self Assessment process. From 2026/27 the return is replaced by quarterly submissions and a final declaration. However, the 2025/26 return itself is unaffected by MTD it is filed through the standard process by 31 January 2027.
If your gross income is between £30,000 and £50,000:
You will come within the MTD mandate from April 2027. You are not yet mandated but should be setting up compatible software and beginning to operate digitally now — so that the transition in April 2027 is straightforward rather than a compliance crisis. As covered in our MTD guide for GP partners and locum doctors, the choice of software and the configuration of your digital records from the outset is critical to smooth MTD compliance.
Payments on Account: Planning Your Cash Flow
Locum doctors who file Self Assessment returns pay their income tax and Class 4 NIC through a system of payments on account advance payments based on the prior year’s liability plus a balancing payment when the return is filed.
The 2025/26 payment cycle:
First payment on account for 2025/26: 31 January 2026 (already paid 50% of your 2024/25 tax liability) Second payment on account for 2025/26: 31 July 2026 (50% of your 2024/25 tax liability) Balancing payment for 2025/26: 31 January 2027 (actual 2025/26 liability minus the two payments on account) First payment on account for 2026/27: 31 January 2027 (50% of your 2025/26 liability due at the same time as the balancing payment)
This means the 31 January 2027 deadline involves three payments simultaneously for many locum doctors the balancing payment for 2025/26 and the first payment on account for 2026/27. This is a significant cash flow event that requires advance planning.
Reducing payments on account:
If your 2025/26 locum income is materially lower than your 2024/25 income for example if you have taken on a salaried post and reduced locum sessions — you can apply to reduce your payments on account to reflect the lower expected liability. This application must be made before the payment deadline. Incorrectly reducing payments on account (claiming a lower income than actually occurred) results in interest and potentially a penalty. Our personal tax team reviews payment on account levels for all locum clients before each payment deadline.
IR35 and Your Tax Return: Declaring Your Status Correctly
If you operate through a personal service company, your tax return must reflect the correct IR35 position for each of your engagements during 2025/26. As detailed in ourIR35 guide, the off-payroll working rules place responsibility for IR35 determination on the engager (the GP practice or NHS body) in the public sector not on your company. However, your personal return must still correctly reflect the consequences of those determinations.
If an engagement was determined to be inside IR35:
The deemed employment income from that engagement should have been processed through PAYE by either the engager or the agency in the chain. You should have received payslips or a P60 showing this income and the tax deducted. This income appears on the employment pages of your return not the self-employment pages. The tax deducted at source should offset your liability for that income.
If an engagement was determined to be outside IR35:
Income from your company that relates to outside-IR35 engagements flows through the company’s corporation tax return and then to your personal return as salary (on the employment pages, from your P60) and dividends (on the dividend income pages).
A mixed position:
Many locum doctors have some engagements inside IR35 and some outside. This creates a complex return where income from different engagements is reported in different places and taxed differently. Getting this right requires careful matching of income to engagements and correct application of the IR35 deemed payment rules. This is an area where specialist advice significantly reduces both the tax cost and the compliance risk.
Common Mistakes on Locum Doctor Tax Returns
Based on the returns we review when locum doctors switch to Kudos from self-filing or from generalist accountants, here are the errors we find most frequently.
Claiming travel from home to a salaried post as business mileage. Travel to a salaried permanent workplace is ordinary commuting and is not deductible. Only travel to temporary locum engagements is deductible. Many locum doctors with mixed employment and self-employment claim all their mileage without distinguishing between the two.
Failing to claim NHS pension contributions as a tax deduction. This is particularly common for locums who receive pension contribution statements separately from their income statements and do not connect the two in their return.
Not declaring all income sources. Private medical report fees, expert witness payments, and occupational health income are frequently overlooked, particularly if they are paid by a single payer in a lump sum at irregular intervals.
Incorrect IR35 treatment. Declaring income from inside-IR35 engagements as self-employment income rather than as PAYE income — is both an error and a potential source of double taxation if PAYE was already deducted by the engager.
Missing the annual allowance charge. Locum doctors who receive a pension savings statement from NHSBSA frequently do not realise they must declare the annual allowance charge on their return. The charge is payable whether or not the doctor elects Scheme Pays — it must appear on the return regardless.
Failing to keep contemporaneous mileage records. Reconstructed mileage logs produced at year-end are significantly weaker than daily logs maintained throughout the year. HMRC’s position is that a reconstructed log is not reliable evidence of the journeys claimed.
Applying the wrong tax year to income. Income is declared in the tax year in which it is earned, not when it is received. Locum sessions in March 2026 paid in April 2026 belong in the 2025/26 return, not the 2026/27 return.
Assuming Class 2 NIC no longer matters. While mandatory Class 2 NIC was abolished from April 2024, locum doctors with profits below £6,845 in 2025/26 do not receive the automatic State Pension credit. If this applies to you and you have not made voluntary Class 2 contributions at £3.50 per week, you may have a gap in your National Insurance record that affects your future State Pension entitlement. Check your NI record at gov.uk and consider making voluntary contributions if a gap exists.
Frequently Asked Questions
I worked as a locum through an agency that told me I was employed. Do I still need to file Self Assessment?
If the agency correctly treated you as employed deducting PAYE income tax and NIC from your pay and issuing you a P60 you may not need to file Self Assessment solely for that income. However, if your total income from all sources exceeds £100,000, if you have any other untaxed income, or if your total income means you owe additional tax not collected through PAYE, you will still need to file. Many locums placed through agencies are in fact self-employed despite the agency’s treatment of them if you received a gross payment with no PAYE deduction, that is self-employment income. Our personal tax team can review your specific arrangements and confirm whether you need to file.
I have not filed Self Assessment for two years because I thought my PAYE covered everything. What should I do?
Register for Self Assessment immediately and file outstanding returns as soon as possible. HMRC charges automatic penalties for late filing £100 immediately on the filing deadline, then additional daily penalties after three months, and further surcharges after six months and twelve months. The longer you leave it, the larger the penalties accumulate. Voluntary disclosure of late returns, with payment of the tax owed plus interest, is significantly cheaper than waiting for HMRC to open an investigation.Contact our teamimmediately — we can manage the registration, prepare the outstanding returns, and negotiate with HMRC on your behalf where penalties are disproportionate.
My locum income varies significantly year to year. Can I average it for tax purposes?
No income averaging does not apply to locum doctors in the same way it applies to certain other professions. Each tax year is assessed independently. However, the payments on account system means that if your income was high in 2024/25 but significantly lower in 2025/26, you can apply to reduce your July 2026 and January 2027 payments on account to reflect the lower expected liability — avoiding the cash flow impact of overpaying tax in advance.
I operate through a limited company and pay myself a salary plus dividends. What do I need to declare on my personal return?
Your personal Self Assessment return declares the salary you received from your company (from your P60), the dividends you received from your company (shown on a dividend voucher), and any other personal income not taxed at source. Your company’s income, expenses, and corporation tax are entirely separate they are dealt with through the company’s corporation tax return, not your personal return. If your company also made employer pension contributions on your behalf, these do not appear on your personal return (they are a company expense) but they do count towards your annual allowance calculation. Our personal tax team prepares both the personal return and the company corporation tax return for locum doctors operating through limited companies as a combined service.
I received a letter from HMRC saying I owe tax from a previous year. What should I do?
Do not ignore HMRC correspondence. The letter could relate to underpaid PAYE from a prior year (which HMRC may collect through your tax code rather than a direct payment), a query about your Self Assessment return, or the opening of a compliance enquiry. Read the letter carefully and respond within the timeframe stated. If the letter relates to a Self Assessment compliance check or enquiry, seek professional advice before responding the way you respond to HMRC’s initial enquiry significantly affects how the investigation develops. Contact our team immediately if you have received an HMRC compliance letter relating to your locum income.
Summary: Your Self Assessment Action List for 2025/26
The 2025/26 Self Assessment return is due by 31 January 2027 — but leaving it until January is not advisable. The complexity of locum doctor returns, the interaction with NHS pension contributions and annual allowance, the need to gather income information from multiple sources, and the cash flow planning required for the January 2027 payment all make early preparation significantly less stressful and more accurate than a last-minute submission.
The key actions to take now are clear. Gather all income documentation P60s from any salaried employment, agency payment schedules, invoices issued for direct locum work, dividend vouchers from any company, rental income records, and bank statements. Compile your expense records mileage logs, receipts for professional subscriptions, CPD costs, equipment purchases, and accountancy fees. Request your NHS pension savings statement if you are a higher earner who may be approaching the annual allowance. Review your IR35 status for each engagement during 2025/26 and confirm how each was treated for tax purposes. Check your National Insurance record at gov.uk if your locum profits fell below £6,845 in 2025/26 and you did not make voluntary Class 2 contributions, you may have a gap to fill. Check whether you are within the MTD mandate for 2026/27 and if so confirm your software is set up and your first quarterly update has been or will be submitted correctly.
Working with a specialist healthcare accountant who understands the specific income structure of locum doctors — not a generalist tax preparer who treats your return like any other self-employment income is the most effective way to ensure you are claiming every allowance you are entitled to, declaring everything you are required to, and planning your tax position optimally for the year ahead.
If you would like Kudos to prepare your 2025/26 Self Assessment return or to manage your MTD compliance for 2026/27,contact our team now the earlier in the year we begin, the more comprehensive the planning we can do for you.
You may also find these related guides useful: MTD for income tax — what GP partners and locum doctors must do, IR35 and healthcare workers 2026, dividend tax increase April 2026, NHS pension annual allowance 2026, and personal tax for healthcare professionals.
Book a free consultation with Kudos Accounting → kudosaccounting.co.uk/contact-us