Table of Contents
Who this guide is for
Many doctors at some point in their career will work in a self employed capacity either as their main source of income or separate to their main role.
Examples of self-employed work include:
- You work as a locum (GP, hospital doctor, psychiatrist, etc.) taking bookings directly rather than through an umbrella/agency PAYE arrangement
- You’re a GP partner in a practice
- You run private clinics or sessions alongside NHS work
- You do medico-legal reporting, expert witness work, or teaching on a self-employed basis
- You run a side business which is not a hobby e.g. a fitness coach
If you’re paid via PAYE for all your work (including most agency locum arrangements and salaried GP posts then you will not be self-employed. Also some doctors also use personal service companies and if that’s the case then you will not be self-employed.
Sole trader vs limited company
Many doctors with modest private income trade as sole traders — it’s simpler than using a company and avoids IR35 complications.
A limited company can in some cases be more tax-efficient at higher, sustained profit levels (retaining profit, paying dividends) but:
- Off-payroll working (IR35) rules mean many NHS/agency locum engagements are still taxed as employment even through a company
- You lose access to the NHS Pension Scheme for that income
- Accountancy and admin costs rise
For more information https://medicsmoney.co.uk/ep-287-deep-dive-into-tax-strategies-limited-companies-explained/
If you are considering using a company then we would always recommend that you consult a medical specialist accountant first
This guide will focus on self-employment.
Getting set up
Register with HMRC
You must register for Self Assessment as self-employed by 5 October following the end of the tax year in which you started trading. Register online via GOV.UK — you’ll get a Unique Taxpayer Reference (UTR) and will then need to submit tax returns annually.
For example if you started as a self-employed locum on 1 August 2025 the latest you would need to register would be 5 October 2026. You will need to submit a tax return for the 2025/26 year by 31 January 2027.
Business bank account
A separate business account isn’t legally required for sole traders but makes record-keeping far easier, especially once Making Tax Digital applies to you (see Section 7). Its also useful for segmenting your work life with your home life and its always useful to keep any tax savings separate.
Income tax and National Insurance
You will have to pay tax on the profits you make from the business. In simple terms profits are income less expenses. Self-employed doctors can account for income and expenses on a cash basis – that is income falls into the tax year the money is received and expenses fall into the tax year they are paid.
Income Tax – income tax is calculated in the same way as employment income
https://medicsmoney.co.uk/income-tax-for-doctors/
National Insurance – Self-employed profits are subject to Class 4 NI:
- 6% on profits between £12,570 and £50,270
- 2% on profits above £50,270
A separate form of national insurance, Class 2 NI is no longer compulsory (abolished from April 2024) — profits above the Small Profits Threshold (£7,105) automatically credit a qualifying year toward your State Pension. Below that, you can pay voluntary Class 2 (cheap) to protect your NI record.
If you have a mixture of employed income and self-employed income then the calculation will be more complex.
Student Loan – Student loan repayments use the self-employed profits as the income on which the calculation is made. These are paid once a year on 31 January following the end of the tax year through the self-assessment tax system. https://medicsmoney.co.uk/the-most-comprehensive-guide-to-student-loans-for-medical-students/
Payments on account
If your Self Assessment bill exceeds £1,000, HMRC usually requires payments on account — advance payments toward the following year’s tax, split 50/50, due 31 January and 31 July.
This catches many first-year self-employed doctors off guard, as you can owe 150% of a year’s tax in one January payment albeit that is paid in arrears. Saving for tax from day one though is important and we would recommend a separate tax saving account which you do not touch.
How much you should save will depend on how much you earn and whether you have a student loan. Seek advice from a medical specialist accountant to get this right.
Allowable expenses
Self-employed doctors can claim expenses which are “wholly and exclusively” for the purposes of the business which is a far wider definition than those which can be claimed against employment income. These include but are not limited to;
- GMC retention fee, royal college/specialty association subscriptions
- MDU/MPS/MDDUS indemnity subscriptions
- Professional courses, exams, CPD directly related to your work
- Travel between sites (not ordinary commuting to a single regular workplace)
- Home office costs if you do admin/reporting from home
- Accountancy fees
- Work-related equipment (stethoscope, scrubs, etc.)
- Telephone and IT costs
- Pension contributions
Keep records of all your expenses from day 1. Again a dedicated bank account may help.
Trading Allowance – you have the option to claim up to £1000 of trading allowance expense instead of all of the expenses above. It is an either or option. This is useful where you have small amounts of self employed income as it negates the need to register for self-assessment. For example Dr Jones had report income of £800 outside of her NHS employed post. As £800 is fully covered by the trading allowance then there is no tax to pay and no requirement to disclose the income on a tax return.
VAT
Medical services delivered by a registered doctor for the purpose of protecting, maintaining, or restoring health are generally VAT-exempt, which covers most clinical work. However, some services (e.g. cosmetic work with no medical purpose, some medico-legal reporting, and expert witness work) can be standard-rated.
If your VATable turnover (from taxable, not exempt, supplies) exceeds £90,000 in a rolling 12-month period, you must register for VAT on that income stream. This is a common blind spot for doctors doing significant expert witness or medico-legal work — get this checked by an accountant if it applies to you as it’s a highly specialised area.
Making Tax Digital for Income Tax (MTD for ITSA)
This is the biggest process change for self-employed doctors in years.
Instead of one annual Self Assessment return, you’ll keep digital records and send quarterly updates to HMRC through MTD-compatible software, followed by a Final Declaration each year that replaces the old tax return.
Who's affected and when
The measurement is based on gross self-employment income (not profit) plus property income (before expenses) in the relevant prior tax year:
| Your gross qualifying income | You must join MTD from |
|---|---|
| Over £50,000 (in 2024/25) | 6 April 2026 |
| Over £30,000 (in 2025/26) | 6 April 2027 |
| Over £20,000 (in 2026/27) | 6 April 2028 |
“Qualifying income” is gross — before expenses — and combines self-employment plus property income. It does not include PAYE salary, NHS pension income, or dividends. This catches doctors who think of locum or private work as “just a side income”: a GP earning £35,000 privately plus £18,000 from a rental property would be over the £50,000 threshold.
What you need to do:
- Keep digital records of income and expenses using MTD-compatible software (most accounting software providers — e.g. Sage, FreeAgent, Xero, QuickBooks — have MTD-ready packages , often at reduced cost for sole traders). Be careful about choosing a free provider e.g. some banks offer it as the software may be restricted and not very useful.
- Submit a quarterly update roughly every three months
- Submit a Final Declaration after the tax year end, combining all income sources to calculate your total liability
There’s a separate points-based penalty regime for late MTD submissions, distinct from Self Assessment penalties. These will apply from 6 April 2027 onwards.
Pensions
The NHS Pension Scheme
If your self-employed work is performed directly for the NHS as a GP (e.g. GP partners, most GP locums working NHS sessions under NHS Pension Scheme rules), you can usually still contribute to the NHS Pension Scheme.
Locum GPs typically pay contributions based on certified monthly income (Form A/B).
GP partners pay contributions monthly based on an estimated income certified annually by completion of a Type 1 pension certificate.
https://medicsmoney.co.uk/annual-pension-returns/
Important: agency locum work and work through a limited company generally does not carry NHS pension access. If pension continuity matters to you, factor this into how you structure your work.
Private/personal pensions
For income not eligible for the NHS scheme (limited company work, most private practice, agency PAYE with no NHS pension access), a SIPP (Self-Invested Personal Pension) is the usual alternative, with tax relief at your marginal rate up to the £60,000 Annual Allowance (subject to the same tapering rules, and to your relevant UK earnings).
Professional indemnity and liability
The GMC requires every practising doctor to have “adequate and appropriate insurance or indemnity arrangements in place covering the full scope of your medical practice in the UK” as a condition of registration. This applies regardless of employment status.
Each country in the UK has its own NHS indemnity rules so make sure you understand what you need to do depending on where you work.
What’s already covered for NHS work
- Clinical negligence claims arising from NHS work are generally covered by state/Trust indemnity, or — for GP work in England — the Clinical Negligence Scheme for General Practice (CNSGP), administered by NHS Resolution, for incidents from 1 April 2019 onward. Older GP claims may fall under the Existing Liabilities Scheme (ELSGP)
- This state cover does not extend to: private/non-NHS clinical work, GMC referrals and fitness-to-practise proceedings, inquests, disciplinary and employment matters, Good Samaritan acts, complaints handling, and other non-claims medico-legal support.
What you still need to arrange yourself
Most doctors maintain membership with a Medical Defence Organisation (MDO) — the Medical Defence Union (MDU), Medical Protection Society (MPS), or MDDUS — or a contractual indemnity insurance product, to cover the gaps above. Key distinctions:
- MDOs are typically mutual, discretionary organisations — support isn’t contractually guaranteed, though it’s rarely refused for members in good standing
- Newer insurance-backed indemnity products, regulated by the FCA, offer contractual (guaranteed) cover but may have specific policy exclusions
What to check for your situation:
- Salaried NHS GP: CNSGP covers clinical negligence; MDO/indemnity mainly for GMC, complaints, inquests
- GP partner: Same as above, plus practice-level business liability (check your partnership agreement covers this clearly)
- Locum GP (NHS sessions): CNSGP applies while working NHS sessions; you’ll still want MDO cover for non-claims matters
- Any private practice work: Not covered by NHS/state schemes at all — you need indemnity that explicitly covers private work, sized to the risk of that specialty
- Hospital doctors: Trust indemnity typically covers NHS clinical negligence for substantive and bank posts; locum/agency work should be checked individually — don’t assume cover carries over automatically
Your MDO/indemnity subscription is a tax-deductible business expense (Section 5).
Record keeping and getting help
- Keep records for at least 5 years after the 31 January submission deadline for the relevant tax year
- Separate business and personal spending where practical — even as a sole trader
- An accountant experienced with doctors is worth the fee: NHS pension annual allowance calculations, MTD software setup, and the interaction between NHS salary and self-employed/locum income are genuinely easy to get wrong, and errors are expensive https://medicsmoney.co.uk/medical-accountant
Key annual deadlines
| Deadline |
What’s due |
|---|---|
| 5 October | Register for Self Assessment if newly self-employed |
| 31 January | Self Assessment filing deadline + balancing payment + 1st payment on account |
| 31 July | 2nd payment on account; Scheme Pays election deadline (NHS pension) |
| Ongoing (once in MTD) | Quarterly digital updates, every 3 months |
