How Do Locum Pharmacists Pay Tax in the UK? A Practical Guide

Disclaimer: This guide provides general information for locum pharmacists in the UK and is not a substitute for professional advice from a qualified accountant. Tax rules and regulations are subject to change.

For many pharmacists, the transition from the predictability of a PAYE (Pay As You Earn) salary to the world of locuming is liberating. However, with this newfound flexibility comes a crucial responsibility: managing your own taxes. The shift from having tax deducted automatically to being responsible for your own declarations can be daunting.

This practical guide demystifies the process, breaking down your obligations into manageable steps to ensure you stay compliant with HMRC and avoid any nasty surprises.

Step 1: Choose Your Business Structure

Before you earn your first pound, you must decide how you will operate. For locum pharmacists, there are two primary options:

Feature	Sole Trader	Limited Company
Setup	Simple. Just register with HMRC.	More complex. Must register with Companies House and HMRC.
Legal Status	You and the business are one legal entity.	The company is a separate legal entity from you.
Liability	Unlimited. Your personal assets are at risk if the business incurs debt.	Limited. Your personal assets are protected.
Admin	Lower. File one Self Assessment tax return per year.	Higher. Requires company accounts, a Corporation Tax return, and a personal tax return.
Best For	Most new locums, due to its simplicity and low setup costs.	Higher-earning locums seeking greater tax efficiency and legal protection.

For most pharmacists starting their locum career, operating as a sole trader is the most straightforward and common choice.

Step 2: Register with HMRC

Once you start working as a locum, you must inform HMRC. You do this by registering for Self Assessment.

This is time-sensitive. You must register by 5th October in your business’s second tax year.

• Example for the current period: If you started locuming between 6th April 2024 and 5th April 2025, your deadline to register for Self Assessment is 5th October 2025 – which is just a few days away!

• If you are just starting now (in the 2025-2026 tax year), you will need to register by 5th October 2026.

You can register easily on the GOV.UK website. Once registered, HMRC will send you a Unique Taxpayer Reference (UTR) number, which you will need to file your tax return.

Step 3: Meticulous Record-Keeping (The Golden Rule)

This is the single most important habit for any self-employed professional. Good records make filing your tax return easier and ensure you are claiming for every expense you are entitled to.

1. Open a Separate Business Bank Account: Do not mix your personal and business finances. This makes tracking income and expenses infinitely simpler.

2. Keep All Invoices: Maintain a record of every invoice you send out.

3. Track All Business Expenses: Keep every receipt for business-related purchases. Use a spreadsheet or accounting software (like Xero, FreeAgent, or QuickBooks) to log these regularly.

4. Maintain a Mileage Log: If you use your personal car for work, keep a detailed log of your business journeys, including dates, destinations, and mileage.

Step 4: Understand Your Allowable Expenses

As a sole trader, you are taxed on your profits, not your total income. Your profit is your income minus your allowable business expenses. It is vital to claim for everything you are entitled to. The golden rule is that the expense must be "wholly and exclusively" for your business.

Common allowable expenses for locum pharmacists include:

• Professional Fees: GPhC registration fees, Royal Pharmaceutical Society membership, PDA/NPA membership.

• Insurance: Professional indemnity insurance.

• Travel Costs:

  • Mileage for using your own vehicle (HMRC allows a simplified rate of 45p per mile for the first 10,000 miles).

  • Public transport fares (train, bus).

  • Parking and tolls for business journeys.

• Equipment: Stethoscopes, blood pressure monitors, reference books, stationery.

• Office Costs: A proportion of your home's utility bills if you do admin work from home (HMRC offers a simplified flat-rate deduction based on hours worked).

• Accountancy Fees: The cost of hiring an accountant is a tax-deductible expense.

• CPD and Training: Costs for courses required to maintain your professional standards.

Step 5: The Self Assessment Tax Return & Key Deadlines

Each year, you must complete a Self Assessment tax return, which details all your self-employed income and expenses. The deadlines for the previous tax year (6th April 2024 - 5th April 2025) are:

• Paper Tax Return Deadline: Midnight, 31st October 2025.

• Online Tax Return Deadline: Midnight, 31st January 2026.

• Deadline to Pay Your Tax Bill: Midnight, 31st January 2026.

  
  

Understanding 'Payments on Account' This often catches new locums out. If your Self Assessment tax bill is more than £1,000, HMRC requires you to make advance payments for the next tax year. These are called 'Payments on Account'.

• You pay 50% of your previous year's bill by 31st January.

• You pay the other 50% by 31st July.

Step 6: Putting Money Aside for Tax (The "Tax Pot")

As a locum, you are responsible for paying your own Income Tax and National Insurance. A crucial habit is to set aside a percentage of every single invoice into a separate savings account.

A safe rule of thumb is to save 25-30% of your gross income. This should comfortably cover:

• Income Tax: Charged at 20%, 40%, and 45% depending on your profit.

• Class 2 National Insurance: A flat weekly rate.

• Class 4 National Insurance: A percentage of your profits.

  
  

Conclusion

Navigating the UK tax system as a locum pharmacist requires organisation and discipline. By choosing the right structure, registering promptly, keeping immaculate records, and understanding your obligations, you can manage your finances with confidence. Always remember the key deadlines and, most importantly, create a "tax pot" from day one.

If you feel overwhelmed, hiring an accountant is a wise investment. Their fee is tax-deductible, and their expertise can save you money and stress in the long run.