Locum & sessional
Tax support for UK locum and sessional dentists
Locum dentists hit a tax structure decision early in their working life and live with it for years. Limited company, umbrella, or self-employed sole trader. The right answer depends on your income level, the engagement mix across NHS and private, and the IR35 determinations the practices you work at are issuing.
The three structures available to a UK locum dentist
Each has trade-offs on tax efficiency, administrative burden, IR35 risk and access to the NHS Pension scheme. None is universally right.
- Self-employed sole trader: simplest admin, full expense claims, NHS Pension access via the practitioner pensions arrangement. Personal liability for tax. NI Class 4 at 6%/2%.
- Limited company (Personal Service Company): tax-efficient at higher income levels via salary-and-dividend extraction. Subject to IR35 on every engagement; the engaging practice determines status if it's a medium or large client. Inside IR35 = PAYE deductions despite the Ltd. NHS Pension access becomes more complex.
- Umbrella company: simplest of all from the locum's perspective. The umbrella employs you and runs PAYE. No expense claims (with very limited exceptions). Effectively a PAYE employment relationship for tax purposes. Suits short-term and low-volume locuming.
When the limited company route makes sense
A limited company route earns its administrative cost above roughly £80,000–£100,000 of locum income sustainably, AND when most engagements sit clearly outside IR35, AND when the locum has tax-planning flexibility (e.g. a non-working spouse, deferred income horizon, employer pension capacity).
Below those thresholds, or with most engagements inside IR35, the Ltd company route delivers little advantage over sole-trader status, and you carry the extra administrative cost and compliance burden for no real upside.
IR35 for locum dentists: what changed in 2021
From 6 April 2021, when the engaging practice is a medium or large client (which most NHS practices and dental groups are), the practice determines IR35 status for the engagement, not the locum's PSC. If the practice issues a Status Determination Statement saying 'inside IR35', PAYE-style deductions apply on the fees despite the Ltd co structure.
In practice this means: a locum with five different practice engagements may have some engagements determined inside IR35 and others outside, with different tax treatment for each. We help work out the realistic post-tax outcome before any structural decision, not after.
Allowable expenses for self-employed and Ltd-co locums
Outside IR35 (sole trader or PSC), genuine commercial expenses are deductible. Inside IR35 (deemed-employment engagements), only limited expenses apply.
- Indemnity insurance: deductible regardless of structure (genuinely necessary cost)
- GDC retention: deductible
- CPD courses, conferences and learning materials: deductible if clinically relevant
- Travel between practices: deductible (not home-to-first-practice — that is commute)
- Loupes, instruments, lab coats and clinical equipment: deductible
- Subscriptions to clinical journals and specialty associations: deductible
- Accountancy fees: deductible
Frequently asked
- Should I incorporate as a locum?
- Not automatically. Below roughly £80,000–£100,000 of sustained locum income, the administrative cost of running a limited company rarely beats sole-trader status post-tax. The IR35 reforms have removed much of the historical advantage for locums whose engagements are now determined inside IR35. We model your specific income and engagement mix before recommending.
- Can I access the NHS Pension Scheme as a locum?
- Self-employed sole-trader locums working under NHS contracts can usually access the NHS Pension Scheme via the practitioner pensions arrangement. Limited-company locums and umbrella locums face more restrictive access. This is a real factor in the structural decision and we factor it in.
- What happens if a practice issues me a 'inside IR35' determination?
- If you're working through a limited company, the practice will operate PAYE-style deductions on your fees before paying your company. Your company receives the net. You pay no salary or dividend from the inside-IR35 engagement (drawing it out would be double-taxation). The result is similar to being PAYE-employed by the practice for that engagement, but with the additional Ltd-co overhead. You can challenge the determination but most are correctly issued.
- I work for an umbrella. What does the umbrella actually do?
- The umbrella employs you under a contract of employment, runs PAYE on your earnings, deducts income tax and employee NI, and pays you the net. The engaging practice pays the umbrella, not you. The umbrella takes a fee (commonly £15-£30 per week or 1-2% of gross). Allowable expenses are very limited under umbrella arrangements. Umbrella is convenient and low-admin; tax-efficient it is not.
Free scoping call
Get your locum structure right
Book a 30-minute scoping call. We will model your income against all three structures and tell you which one wins on real numbers.
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