NHS Locum Work & IR35 Guide

Complete guide to IR35 rules, pension eligibility, and tax planning for NHS locum doctors, GPs, and healthcare professionals working off-payroll.

Last updated: 2025-07-22

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Critical: 10-Week Deadline

NHS pension contributions for freelance locum work must be submitted within 10 weeks of the work ending. After this deadline, the work cannot be made pensionable and will be rejected.

Locum Work: IR35 & Pension Eligibility Quick Guide

Employment Structure	IR35 Status	Tax Treatment
Direct with NHS Trust/CCG		PAYE + NI
Agency (Inside IR35)		PAYE + NI
Umbrella Company		PAYE + NI
Limited Company (Outside IR35)		Corp Tax + Dividends
Freelance GP Locum (Directly)	Outside IR35	Self-Employed

Understanding IR35 Rules

What is IR35?

IR35 (off-payroll working rules) determine whether you should be treated as an employee for tax purposes, even when working through an intermediary like a limited company or agency.

Inside IR35 (Deemed Employment)

You're likely inside IR35 if you:

•Work set hours determined by the engager
•Must personally do the work (no substitution rights)
•Work under direct supervision and control
•Use engager's equipment and resources

Tax Treatment: PAYE + National Insurance deducted as if employed

Outside IR35 (Genuine Contracting)

You're likely outside IR35 if you:

•Have genuine substitution rights
•Control how, when, and where you work
•Take financial risk (equipment, insurance, etc.)
•Work for multiple clients simultaneously

Tax Treatment: Corporation Tax + dividend tax efficiency

NHS Pension Eligibility Rules

✅ Pension Eligible Scenarios

Direct engagement with NHS employer
Freelance GP locum work (direct to practice)
Bank staff employed directly by NHS

Contribution Rate: Employee 14.38% + Employer contributions

❌ NOT Pension Eligible

Limited company invoicing
Umbrella company employment
Agency employment (even if inside IR35)

Alternative: Personal pension contributions up to £60,000 annually

Freelance GP Locum Pension Process

Step-by-Step Process

Complete the Work

Ensure all locum sessions are properly documented with dates and fees.

Calculate Contributions

Calculate both employee and employer contributions:

• Pensionable pay = 90% of locum fee
• Employee contribution = based on tiered rates
• Employer contribution = 14.38% of pensionable pay

Submit Within 10 Weeks

Submit pension application to PCSE/LHB no later than 10 weeks after work ended.

Pay Contributions

Pay both employee and employer contributions by 7th of following month.

Alternative Pension Options (Non-NHS Eligible Work)

Limited Company Directors

•Annual allowance: £60,000 (same as NHS)
•Tax-deductible business expense
•Reduces corporation tax liability
•SIPP or executive pension schemes

Umbrella Company Workers

•Workplace pension (if offered)
•Personal pension contributions
•Limited tax relief (20% basic rate)
•Consider additional voluntary contributions

Tax Planning Strategies

Mixed Employment Strategy

Many doctors combine NHS employment with locum work. This requires careful annual allowance management:

• Monitor combined pension input amounts
• Use carry forward if approaching limits
• Consider timing of additional contributions
• Plan for tapered allowance if high earner

Limited Company Efficiency

For genuine outside IR35 contracts, limited companies offer tax efficiency:

• Corporation tax: 25% on profits over £250k, 19% below
• Dividend tax: 8.75% basic, 33.75% higher rate
• Pension contributions: Tax-deductible business expense
• Salary optimisation: Pay just enough for NI credits

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