Setting up a limited company for locum work for GPs

8th August 2013 by Liz Densley

Setting up a limited company for locum work for GPs

You can potentially save tax/NIC by putting freelance income through a limited company: however, you are not permitted to pension such income through the NHS scheme.

Now that the practices are responsible for paying the 14.3% employers contribution – and are using that to negotiate fees downwards (unless you’re part of a locum chambers where you have much stronger negotiating power) so their net costs don’t change , some of that advantage may have been lost. However you should not underestimate the value of the NHS pension scheme.

Let’s assume a worst-case situation, where a practice will pay you the same amount whether you are in the pension scheme or not. As a self-employed locum earning £80k a year after expenses (before deducting superannuation), you’d be left with £44,128 in hand after superannuation/tax/NIC.

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Related FAQs

How can I claim my locum chambers fee for tax purposes?

Fees paid to your chamber are tax deductible. Your accountant will be able to give you personalised advice. Generally, the suggestion would be to show the fee on your tax return as either ‘other office costs’ or ‘admin support’ rather than ‘professional subs’ (which normally relates to membership of a professional body, rather than buying a specific service). So long as it is analysed consistently, it doesn’t really matter how it’s classified on your tax return.

Which training costs can GP locums claim for?

The rules for salaried GPs and self-employed GP locums are different.

Salaried GPs

If you are a salaried GP you can only claim for courses that are ‘wholly, exclusively and necessarily’ in the course of your work. The ‘necessarily’ is the tricky bit – because that would mean absolutely anyone doing that job would have to do that course. The effect of this is that generally salaried doctors cannot claim training costs, so ideally get them built into the remuneration package so that the practice pay for them. Providing it is work related, it will not be a taxable benefit.

There was talk of training being treated differently just before the 2018 Budget, but nothing came of it. Be aware that the rules may change in the future.

Locum GPs

If you are a self-employed doctor, you can claim for courses that are ‘wholly and exclusively’ for the purposes of your work. This gives much more scope.

Generally any courses that are keeping you up to date or improving your existing skills will be deductible. Anything unrelated to your work won’t of course – so a GP couldn’t claim for a course on plumbing or bricklaying!

A new qualification – or something that enables you to do something that you cannot currently do – will be treated as ‘capital’ and will not be deductible. There is a grey line between what is a new skill and what is an extension of an existing skill – and that needs professional advice when it arises.

What does ‘wholly and exclusively’ mean? Generally there won’t be personal benefit in a course, but beware ‘holiday’ courses where HMRC could argue that the holiday element is more than an incidental part of the cost. Once there is ‘duality of purpose’ (such as a holiday with some training), HMRC are within their rights to refuse the whole of the claim.

What is the cost of the course? That will be the course cost itself, any related reading material etc, travel to get there, subsistence and reasonable accommodation (if it is not reasonable to return home).

What if you are both salaried and self-employed?

It will normally be acceptable to claim course costs against the self-employed income.If HMRC want to be awkward, they could argue duality of purpose – because you can’t learn something and only use it for your self-employed work. We had this point made in an investigation some years ago, but HMRC did back down and agree the cost in full against the self-employed work (but on a reasonable basis, rather than under the letter of the law). If you are trying to claim for a £5k course against £5k of locum work when you are employed full time, expect it to be questioned!

Where can I find definitive advice about GP locums and GP practices, and IR35?

Fortunately we work closely with Honey Barrett, specialist accountants, who have pulled together a whole load of information for you.

IR35 ‘intermediary legislation’ and public sector employment for GP locums

Do I need to register for VAT as a GP locum?

It’s very unlikely that you’ll need to register for VAT as a GP. There is a wealth of information here on HM Revenue & Customs website, and worth having a word with your accountant.

Do I pay tax on the employer’s contributions of my NHS pension?

No, you do not need to pay tax on the employer’s contribution to your NHS pension.

Read more on NHS pensions

What mileage and travel expenses are salaried GPs allowed to claim for?

Salaried GPs may claim for journeys undertaken wholly in the performance of their duties. Where the practice reimburses a doctor for visits (pretty rare!), then salaried GP mileage reimbursements up to 45p per mile (assuming less than 10,000 miles a year) are tax free. Payments in excess of that (sometimes seen in payments by hospital trusts) will be treated as taxable benefits and should be shown on form P11d at the end of the year, and must be recorded on the employment pages of the tax return.

If the practice reimburses less than 45p per mile, the difference can be claimed as an expense of employment. If there is no reimbursement at all, the then full 45p per mile can be claimed as an expense of employment. Where miles exceed 10,000 per annum then the reimbursement rate drops to 25p.

Join the conversation on salaried GP mileage in our GP-only Facebook Group

The above rates relate to car travel; motorcycles can be reimbursed/claimed at 24p; cycles at 20p.

Allowable journeys for salaried doctors would include patient visits, meetings (necessary ones as part of the employment), and travel between different sites, but see the caveat below.

Home to work journeys are not allowable.

Additional mileage may be claimed in restricted circumstances such as:

  • Dr D is employed by multi-site practice A to work at surgery X. If Dr D is asked to work at surgery Y for a limited time (perhaps to cover a maternity leave), then temporary travel from home to another place of work for an intended period of less than two years will be treated as allowable.

Note on the other hand that if Dr E was employed on a temporary basis for the maternity leave mentioned above, home to work mileage would not be allowed because surgery Y would be his main (and indeed only) workplace.

Travel between sites cannot be claimed in the following circumstance:

  • Dr D is still employed by practice A at surgery X. He lives close to surgery Y and pops in each day on his way to work to pick up post. This does not make the journey between the two surgeries a business journey.
  • Dr D is still employed by practice A. He works Mondays and Tuesday at surgery X and Wednesday and Thursday at surgery Y. These are two separate places of employment and travel between them or from home to work for either of them is not deductible.

What mileage and travel expenses are GP locums allowed to claim for?

Claims will depend on the pattern of their work. If they are ‘itinerant workers’ – so that they work at different places from day-to-day with no discernible pattern, then it should be possible to argue that the main place of work is home – the base from which the business is run. This should make all journeys to surgeries allowable.

If however there is a pattern claims will be restricted. For example:


Dr L is a freelance locum. He has a number of regular jobs. He covers at surgery A on Mondays, does two days a week at surgery B and the fourth and fifth days are totally variable. It is likely that surgery A and surgery B become ‘workplaces’ so that home to each of those premises will be a personal journey. The fourth and fifth days should fall within the itinerant rules so that home to surgery will be deductible.

Sometimes the pattern will not be obvious in advance. A short spell of locum work may develop into something more regular (at this stage there is a risk that the locum is no longer freelance in respect of that placement and may need to become salaried, but that is beyond the scope of this FAQ).

Can I charge practices for mileage and travel time?

Salaried GPs

As an employee, probably not; it’s not usual practise in any employment to charge for mileage to and from work. However, there may be an allowance in your contract for use of your car for visits, or if your practice requires you to travel to certain meetings to represent the practice.

Locum GPs

If you’re a locum GP then you can charge for mileage to and from your place of work and for visits too if you want to – some locums do, some don’t. When you charge for mileage, it’s not just the fuel you’re charging for – think of the tax, insurance, oil, servicing bills, wear-and-tear, tyres and the time taken to physically get there etc. What you [successfully] charge is entirely up to your negotiations with your employing practice.

A decision on whether or not to charge depends on how much it’s actually costing you vs both the hassle of working it all out plus the ‘perceived pettiness’ by the practices that may ultimately lead them to booking someone else.

See also

What mileage and travel expenses are GP locums allowed to claim for?

Claims will depend on the pattern of their work. If they are ‘itinerant workers’ – so that they work at different places from day-to-day with no discernible pattern, then it should be possible to argue that the main place of work is home – the base from which the business is run. This should make all journeys to surgeries allowable.

If however there is a pattern claims will be restricted. For example:


Dr L is a freelance locum. He has a number of regular jobs. He covers at surgery A on Mondays, does two days a week at surgery B and the fourth and fifth days are totally variable. It is likely that surgery A and surgery B become ‘workplaces’ so that home to each of those premises will be a personal journey. The fourth and fifth days should fall within the itinerant rules so that home to surgery will be deductible.

Sometimes the pattern will not be obvious in advance. A short spell of locum work may develop into something more regular (at this stage there is a risk that the locum is no longer freelance in respect of that placement and may need to become salaried, but that is beyond the scope of this FAQ).

What mileage records do GP locums need to keep?

Recently we have seen examples of HMRC asking to see locum mileage logs and refusing claims without them. So please try to keep a mileage log of all practice related journeys. It is much easier to take out what turns out not to be deductible, than to try to recreate information that wasn’t retained in the first place.

A mileage log can be a notebook kept in the car, or you can use a spreadsheet or app to keep track.

What if you have not kept a log?

For home to GP surgeries, it is easy enough to Google journeys to find the mileage. Visits are much harder if you haven’t retained records. Some surgeries’ computer systems can produce a printout of visits by doctor, from which you can then work out the mileage. This might work for salaried doctors, but the practices are likely to be less enthusiastic hunting out the information for irregular locums.

Don’t forget to include other travel in the course of work – such as for training courses. If they are not local, that can be a noticeable amount. Salaried doctors will not be able to claim it themselves; they will need to try to get reimbursement from the practice.

If the pattern of work has not changed then a sample period might be sufficient but this is only likely to work for salaried doctors’ visits – and if HMRC want to do it by the book, it still may not be enough. Locum work is unlikely to ever be settled enough for a sample period of mileage log to be representative – so doctors in that position need to get into the habit of keeping a regular log.

Self-employed doctors may usually claim a mileage rate similar to salaried GPs – seek advice from your accountant on how to do that.

What mileage and travel expenses are salaried GPs allowed to claim for?

Salaried GPs may claim for journeys undertaken wholly in the performance of their duties. Where the practice reimburses a doctor for visits (pretty rare!), then salaried GP mileage reimbursements up to 45p per mile (assuming less than 10,000 miles a year) are tax free. Payments in excess of that (sometimes seen in payments by hospital trusts) will be treated as taxable benefits and should be shown on form P11d at the end of the year, and must be recorded on the employment pages of the tax return.

If the practice reimburses less than 45p per mile, the difference can be claimed as an expense of employment. If there is no reimbursement at all, the then full 45p per mile can be claimed as an expense of employment. Where miles exceed 10,000 per annum then the reimbursement rate drops to 25p.

Join the conversation on salaried GP mileage in our GP-only Facebook Group

The above rates relate to car travel; motorcycles can be reimbursed/claimed at 24p; cycles at 20p.

Allowable journeys for salaried doctors would include patient visits, meetings (necessary ones as part of the employment), and travel between different sites, but see the caveat below.

Home to work journeys are not allowable.

Additional mileage may be claimed in restricted circumstances such as:

  • Dr D is employed by multi-site practice A to work at surgery X. If Dr D is asked to work at surgery Y for a limited time (perhaps to cover a maternity leave), then temporary travel from home to another place of work for an intended period of less than two years will be treated as allowable.

Note on the other hand that if Dr E was employed on a temporary basis for the maternity leave mentioned above, home to work mileage would not be allowed because surgery Y would be his main (and indeed only) workplace.

Travel between sites cannot be claimed in the following circumstance:

  • Dr D is still employed by practice A at surgery X. He lives close to surgery Y and pops in each day on his way to work to pick up post. This does not make the journey between the two surgeries a business journey.
  • Dr D is still employed by practice A. He works Mondays and Tuesday at surgery X and Wednesday and Thursday at surgery Y. These are two separate places of employment and travel between them or from home to work for either of them is not deductible.

What mileage records do GP locums need to keep?

Recently we have seen examples of HMRC asking to see locum mileage logs and refusing claims without them. So please try to keep a mileage log of all practice related journeys. It is much easier to take out what turns out not to be deductible, than to try to recreate information that wasn’t retained in the first place.

A mileage log can be a notebook kept in the car, or you can use a spreadsheet or app to keep track.

What if you have not kept a log?

For home to GP surgeries, it is easy enough to Google journeys to find the mileage. Visits are much harder if you haven’t retained records. Some surgeries’ computer systems can produce a printout of visits by doctor, from which you can then work out the mileage. This might work for salaried doctors, but the practices are likely to be less enthusiastic hunting out the information for irregular locums.

Don’t forget to include other travel in the course of work – such as for training courses. If they are not local, that can be a noticeable amount. Salaried doctors will not be able to claim it themselves; they will need to try to get reimbursement from the practice.

If the pattern of work has not changed then a sample period might be sufficient but this is only likely to work for salaried doctors’ visits – and if HMRC want to do it by the book, it still may not be enough. Locum work is unlikely to ever be settled enough for a sample period of mileage log to be representative – so doctors in that position need to get into the habit of keeping a regular log.

Self-employed doctors may usually claim a mileage rate similar to salaried GPs – seek advice from your accountant on how to do that.

When should GP locums file Locum Form B?

You need to send the completed forms and payment within seven days of the end of the month that they relate to e.g. your July GP Locum B form must be sent by 7 August.

Get into the routine of doing this near the end of a calendar month. An exception would be if you’ve received a late payment which will breach the ‘cannot pension work carried out more than 10 weeks ago’ rule.

Who knows why, but you can see why routine is important.

How do GP locums invoice for their work?

Invoices are important legal documents as they are the record of the payment trail needed by both you and the practice for your respective accounts and tax records.

Legally they must include certain information:

  • A unique identification number.
  • Your name, address and contact information.
  • The name and address of the customer you’re invoicing.
  • A clear description of what you’re charging for.
  • Any expenses you are claiming (e.g. travel costs).
  • The dates of work.
  • The date of the invoice.
  • The amount(s) being charged.
  • The total amount owed.

Other important invoice information:

  • Your preferred payment method.
  • Payment due date.
  • Payment reference to help you track that payment has gone into your bank account.
  • Employer’s contribution.

To get paid you need to generate and send invoices. If you’re pensioning your locum income in the NHS pension scheme (NHSPS), you’ll need to send an accompanying GP Locum A pension form for the practice to complete, certifying that you were paid for doing eligible NHS work.

In England & Wales, your invoice and GP Locum A pension form will need to include a charge to the practice for the employer contribution to your pension.

You’re also going to need a system for keeping track of when you’re paid. And, if you’re pensioning your locum earnings in the NHSPS, you’re going to need to set aside some time at the end of every month to assemble all your pension forms, work out what pension contribution you need to pay, and send your payment and paperwork to your relevant pension administrator. Building a routine is key.

What is the McCloud remedy?

Last year our specialist medical IFA and columnist, Nigel Farrar, wrote about the legal judgement which found that changes to firefighters’ pensions in 2015 were age-discriminatory.

What is not yet clear is how this verdict will impact on other public sector pensions, including sessional GPs’ NHS pensions.

The verdict was made in the Court of Appeal in 2018. It is sometimes referred to as the McCloud judgement. Changes to pensions in light of that verdict are sometimes referred to by organisations such as the BMA as the McCloud remedy.

Read Nigel Farrar’s article in full for more information on how the McCloud judgement could affect sessional GPs in NHS pensions schemes.

What do I need to know about the new Locum A and B forms for 2021/22?

NHS pension Forms A and B have changed from 1 April for the new pension year, 2021/22.

The new Locum Form A is already live on LocumDeck.

There’s a new calculation required on Form B and we’re in contact with NHS BSA about what the change means for our members. We’ll send members an update shortly on how we’re changing LocumDeck’s Locum Form B auto-fill form to keep paperwork accurate and up-to-date.

Locum Form B Basics

The GP Locum Form B tells you exactly how much pension contribution you need to pay to cover a specific calendar month. It records all that month’s Locum A forms for income received (not work performed).

Read more in our FAQ on how Form B works.

As a GP locum in a chambers, would I fall under IR35 tax legislation?

One of our members asked recently:

“In the Gov.UK IR35 questionnaire, it asks “Do you provide your services through a limited company, partnership or unincorporated association? An ‘unincorporated association’ is an organisation set up by a group of people for a reason other than to make a profit. For example, a voluntary group or a sports club.’. As I work through a GP Locum Chambers, should I tick “yes”?’

Our specialist employment lawyer advises:

“The answer is no. Although the chambers assists the locums in locating employment, the locum is not providing his services ‘through”‘the chambers. That would only be the case if the chambers was the contracting party with the Medical Center.”

Read more on IR35.

What is box j for on Locum Form B?

Box j is intended to indicate an estimate of your pensionable income and assist you in determining if you are on the correct employee contribution tier as you move through the pension year.

NHS BSA accepts that it will not be an entirely accurate reflection of your pensionable income.

For Locum Form B, do we add up monthly pensionable pay for box j?

Yes. For box j, just add on each month as a rolling figure. The first month, April, will be the same as box a.

For more advice on Locum Form B, see our guide.

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