Associate and locum tax guide: take-home pay, NI and allowable expenses 2025/26

Your employment status

Most dental associates work under a self-employed arrangement. HMRC weighs the substance of the relationship, not the contract label. A written agreement that mirrors the BDA model is good evidence, but the following factors matter most.

• Control: can the principal dictate how you perform clinical work, or only specify the outcome?
• Personal service: must you personally carry out the work, or can you send a substitute?
• Financial risk: do you bear the cost of re-doing work, or carry indemnity in your own name?
• Integration: are you treated as part of the practice team in a way that looks like employment?

A rostered associate who has no autonomy over methods, cannot send a substitute and carries no financial risk is closer to employed status than a genuinely independent contractor. If your arrangement has several of those features, take advice before assuming self-employment stands.

Income tax: how it applies to associate income

As a self-employed associate, you pay income tax on your profit: fees received minus allowable expenses. The 2025/26 rates are as follows.

• Personal allowance: the first £12,570 of profit is tax-free.
• Basic rate: 20% on profit from £12,570 to £50,270.
• Higher rate: 40% on profit from £50,270 to £125,140.
• Additional rate: 45% on profit above £125,140.

The personal allowance tapers away for profits above £100,000 at the rate of £1 for every £2 above that threshold, so it is fully removed at £125,140. If your profits are in that band, your effective marginal rate is 60% on the tapering slice. Pension contributions can bring profit below the taper range.

National Insurance for associates

From 6 April 2024, Class 2 National Insurance was removed for most self-employed people. The weekly charge of £3.45 still applies for 2025/26 if your profits exceed the small profits threshold of £6,725, but you are treated as having paid it rather than paying it directly through your tax return. This protects your state pension entitlement.

Class 4 NI applies on self-employed profit at 6% between £12,570 and £50,270, then 2% above. There is no Class 4 below £12,570.

Allowable expenses: what you can claim

Expenses must be wholly and exclusively for your work as an associate. The most commonly claimed items are listed below.

• Professional indemnity insurance: your personal policy is allowable in full.
• GDC registration fee: the annual retention fee is allowable. Restoration fees after removal from the register are not.
• Subscriptions: List 3 bodies (such as the BDA) and relevant professional journals.
• CPD courses and conferences: the cost of continuing professional development directly related to your work is allowable.
• Loupes, instruments and small equipment: items with a working life of more than two years are capital expenditure, relieved via the Annual Investment Allowance (which covers the full cost in the year of purchase for most associates) rather than as a running expense.
• Mileage between practices: from 6 April 2026, business mileage is reimbursed at 55p per mile for the first 10,000 miles. Travel from your home to your first practice is commuting and is not allowable.
• Home working: a flat-rate of £6 per week is available without records. A proportion of actual home costs can be claimed instead if you use a room exclusively for work, but this rarely applies to clinical dental work.

Items that are not allowable include: personal clothing (even if worn at the practice), private medical insurance for yourself, and costs that are partly personal.

Lab costs and the lab deduction

Your associate agreement typically provides that you bear a proportion of lab costs. The deduction is usually expressed as a percentage of your associate share, not the gross practice fee. Make sure your records match the agreement: HMRC can challenge a lab deduction that does not align with the contract terms or the invoices you hold.

NHS Pension: the associate arrangement

As a self-employed associate, your NHS Pension contributions are based on your net pensionable earnings (fees received minus allowable expenses, broadly). Contributions are deducted at source by the NHS Business Services Authority and are allowable as a deduction from your taxable profit. This means they reduce both income tax and Class 4 NI.

Your tier rate depends on your pensionable earnings band. Contribution rates change as your earnings move between tiers, so it is worth checking your tier at the start of each financial year.

Self Assessment and payments on account

As a self-employed associate, you must register for Self Assessment and file a return each year. The deadline for online returns is 31 January following the end of the tax year. Payments on account are due on 31 January and 31 July each year if your previous year's tax bill exceeded £1,000 and less than 80% of it was deducted at source.

Payments on account are each 50% of the prior year's bill and can catch new associates by surprise in their second year. Plan for them from the outset.

Record-keeping

Keep records of every payment received and every expense. Bank statements alone are not sufficient: you need invoices, receipts and a clear audit trail linking each claim to your work. HMRC can enquire into any return up to 12 months after the filing deadline, or up to 20 years where HMRC suspects fraud or deliberate error.

Should you trade through a limited company?

For associates with higher profits, a limited company structure can reduce the headline tax rate. Corporation tax at 19% (small profits, up to £50,000) or 25% (main rate, above £250,000) is lower than 40% or 45% income tax. You then draw a salary plus dividends, which carry their own tax.

The NHS Pension creates a significant complication. If you incorporate, dividends are not pensionable. You accrue NHS Pension only on the salary you draw, not on retained profit. Over a working career, that lost pension accrual can outweigh the headline tax saving, particularly at moderate profit levels. Model both scenarios before making a decision.

Next steps

The Excel model that came with this guide applies the formulas above to your own figures. Use it to understand your approximate take-home pay, then speak to a specialist to confirm the numbers for your specific situation.