Locum Dentist Day Rate vs Percentage: The Core Question

If you work as a locum dentist in the UK, you have probably been offered work on two different bases: a fixed day rate (sometimes called a per diem locum) or a percentage locum arrangement where you take a share of the fees you generate. Which one pays better?

The short answer is that it depends on the practice's UDA value, private fee levels, and your own tax position. But the longer answer matters more. A higher headline rate can leave you worse off after tax, National Insurance, and pension contributions if you do not structure your working arrangements correctly. This article compares the two models with worked examples so you can decide which suits your circumstances.

How Day Rate Locum Arrangements Work

A day rate (per diem locum) is a fixed fee paid per session or per day, regardless of how much treatment you complete. Typical day rates for locum dentists in England in 2025/26 range from £350 to £600 per day, depending on location, NHS vs private mix, and experience. Some practices offer £450 for an NHS-only day and £550+ for mixed or private-only sessions.

The advantage is predictability. You know exactly what you will earn each day. The disadvantage is that if you are efficient and generate high fee income, the practice keeps the upside. You are paid for your time, not your output.

Tax Treatment of Day Rate Income

If you are genuinely self-employed (the typical locum arrangement), day rate income is treated as trading income. You report it on your Self Assessment tax return under sole trader or partnership income. You pay Class 4 National Insurance at 6% on profits between £12,570 and £50,270, and 2% above that. Class 2 NI was abolished from April 2024.

If you work through a limited company (personal service company or PSC), the practice may need to apply IR35 rules. Since April 2021, medium and large practices must determine your IR35 status. If they deem you inside IR35, the practice deducts PAYE and employer NI before paying your company. This can significantly reduce your net take-home compared to a genuine self-employed arrangement.

How Percentage Locum Arrangements Work

A percentage locum arrangement pays you a share of the fees you generate. Typical splits range from 40% to 55% of gross fees collected. For NHS work, this means a percentage of the UDA value delivered. For private work, it is a percentage of the fees charged and collected.

The advantage is that your income scales with your productivity. If you work quickly and generate high fee income, you earn more. The disadvantage is variability. Quiet days or slow patients mean lower income. You also bear the risk of non-collection if the practice does not collect private fees promptly.

Tax Treatment of Percentage Income

Tax treatment is the same as for day rate income if you are self-employed. The key difference is that your income is variable, which can affect your Payment on Account calculations and cashflow. If you have a bumper month, HMRC expects half of the tax on that income by 31 January and the other half by 31 July following the tax year end.

Percentage locum income is also subject to the same Class 4 NI rules. There is no special tax treatment for percentage-based fees versus fixed fees. The tax system treats both as self-employed trading income.

Worked Example: Day Rate vs Percentage for an NHS Locum

Let us compare two scenarios for a locum dentist working in an NHS practice in England. Assume the practice UDA value is £28 per UDA (a common mid-range figure). The locum completes 12 UDAs per day on average.

Scenario A: Day rate of £450 per day

  • Annual income (200 days): £90,000
  • Self-employed expenses (indemnity, CPD, travel, equipment): £8,000
  • Net profit: £82,000
  • Income tax (2025/26): £12,570 personal allowance, then £37,700 at 20% = £7,540, then £31,730 at 40% = £12,692. Total tax: £20,232
  • Class 4 NI: £37,700 at 6% = £2,262, then £31,730 at 2% = £635. Total NI: £2,897
  • Net take-home: £82,000 - £20,232 - £2,897 = £58,871

Scenario B: Percentage locum at 50% of UDA value

  • Daily UDA value generated: 12 UDAs x £28 = £336
  • Locum share at 50%: £168 per day
  • Annual income (200 days): £33,600
  • Self-employed expenses: £8,000
  • Net profit: £25,600
  • Income tax: £12,570 personal allowance, then £13,030 at 20% = £2,606
  • Class 4 NI: £13,030 at 6% = £782
  • Net take-home: £25,600 - £2,606 - £782 = £22,212

In this example, the day rate locum earns significantly more. But the comparison is not fair unless we adjust for productivity. If the locum completes 20 UDAs per day instead of 12, the percentage arrangement becomes more attractive.

Scenario C: Percentage locum at 50%, 20 UDAs per day

  • Daily UDA value generated: 20 x £28 = £560
  • Locum share: £280 per day
  • Annual income (200 days): £56,000
  • Net profit after expenses: £48,000
  • Income tax: £12,570 at 0%, then £35,430 at 20% = £7,086
  • Class 4 NI: £35,430 at 6% = £2,126
  • Net take-home: £48,000 - £7,086 - £2,126 = £38,788

At 20 UDAs per day, the percentage locum earns £38,788 net, still less than the day rate locum's £58,871. The day rate wins on pure numbers in this NHS example because the UDA value is relatively low. But if the UDA value were higher, say £40 per UDA, the picture changes.

Scenario D: Percentage locum at 50%, 20 UDAs per day, £40 UDA value

  • Daily UDA value generated: 20 x £40 = £800
  • Locum share: £400 per day
  • Annual income (200 days): £80,000
  • Net profit after expenses: £72,000
  • Income tax: £12,570 at 0%, then £37,700 at 20% = £7,540, then £21,730 at 40% = £8,692. Total: £16,232
  • Class 4 NI: £37,700 at 6% = £2,262, then £21,730 at 2% = £435. Total: £2,697
  • Net take-home: £72,000 - £16,232 - £2,697 = £53,071

Now the percentage locum earns £53,071 net, much closer to the day rate figure. If you can consistently achieve high UDA output in a high-value contract, percentage can be competitive.

Private Practice: Where Percentage Can Outperform Day Rate

Private dental fees are typically higher per unit of time than NHS UDA values. A private hygienist appointment might generate £80-£120 in 30 minutes. A private examination and treatment plan might generate £150-£250. If you work in a private practice with high fee levels, a percentage locum arrangement can easily beat a fixed day rate.

Consider a private practice where you see 8 patients per day at an average fee of £180. Total daily fee income is £1,440. At a 50% split, you earn £720 per day. Compare that to a typical private day rate of £500-£600. The percentage arrangement pays more.

Private practice also tends to have lower overheads per patient for the locum. You typically do not need to provide materials or lab work (those are usually covered by the practice or deducted before the split). Your expenses remain similar: indemnity, CPD, travel, and equipment.

Key Factors That Determine Which Is Better

UDA Value and Contract Type

If you work in an NHS practice with a low UDA value (under £25), a day rate is almost always better unless you can consistently deliver 25+ UDAs per day. For high UDA values (£35+), percentage becomes viable. Check the practice's UDA value using our NHS UDA value calculator before negotiating.

Your Efficiency and Speed

If you are a fast worker who can complete treatment quickly without compromising quality, percentage arrangements reward you. If you prefer a steady pace and predictable income, day rate is safer. Be honest with yourself about your typical output.

Practice Collection Risk

With a percentage locum, you share the risk of non-payment. If a private patient does not pay, you do not get your share. Some practices deduct bad debts from your split. Day rate eliminates this risk. Check the practice's payment terms and collection history before agreeing to a percentage deal.

IR35 and Your Business Structure

If you operate through a limited company, IR35 can affect both arrangements. A day rate contract with a practice that treats you as inside IR35 means PAYE deductions at source. A percentage arrangement may also be inside IR35 if the practice controls how you work. Our locum dentist tax page covers this in more detail.

Expense Deductibility

Both day rate and percentage locum income allow you to deduct legitimate business expenses. These include indemnity insurance, GDC registration, CPD courses, travel between practices, professional subscriptions, and equipment. The key is to keep clear records. If you use a car for multiple practices, mileage claims are straightforward. See our guide on associate tax survival guide for a full list of allowable expenses.

Negotiation Tips for Locum Dentists

When a practice offers you a day rate, ask what their typical UDA value is and what output they expect. If they say "around 12 UDAs per day" and the UDA value is £30, you can calculate that the practice is keeping £360 per day while paying you £450. That is a good deal for you.

When offered a percentage, ask for the gross fee income figures for the last three months. If the practice cannot provide them, be cautious. Also clarify what deductions come before your split: lab fees, materials, and bad debts are common deductions. Get the agreement in writing.

Consider a hybrid arrangement. Some locums negotiate a base day rate plus a bonus percentage above a certain threshold. For example, £350 per day plus 50% of all fees above £700 generated. This gives you downside protection and upside potential.

Tax Planning for Locum Dentists

Whichever fee structure you choose, tax planning is essential. Locum dentists often face large tax bills because they do not have PAYE deductions. Set aside 25-30% of each payment for tax and NI. Make sure you register for Self Assessment if you have not already. The online filing deadline is 31 January following the tax year end.

If your income varies significantly between years, consider using a limited company to smooth your tax liability. But be aware of IR35. Many locums find that being genuinely self-employed (sole trader) is simpler and more tax-efficient for lower to mid-range incomes. Our dental accountants can help you model both scenarios.

Conclusion: Which Should You Choose?

There is no universal answer. For most NHS locums, a day rate of £450+ is better than a 50% split on a typical UDA value of £25-£30. For private locums, percentage arrangements often win because fee levels are higher. For locums who work fast in high-value NHS contracts, percentage can match or beat day rate.

The best approach is to run the numbers for each specific opportunity. Use our locum cost benefit calculator to compare day rate and percentage offers side by side. Factor in your expenses, your efficiency, and the practice's fee structure. And always speak to a dental-specialist accountant before committing to a long-term arrangement.

If you are unsure which structure suits your circumstances, contact us for a free initial discussion. We work with locum dentists across the UK and can help you optimise your income and tax position.