Locum Pharmacist Tax Guide: Expenses & Tips (for the 2025/26 Tax Year)

Managing your finances effectively is key to a successful career as a self-employed locum pharmacist. This guide breaks down the UK tax system for locums, covering the two main structures: operating as a sole trader or through a limited company. We will focus on the essentials of tax compliance and, most importantly, the allowable expenses you can claim to reduce your tax bill.

Option 1: Operating as a Sole Trader (Self-Assessment)

As a self-employed locum, the most straightforward way to operate is as a sole trader. This means you are the business, and you are personally responsible for reporting your income and paying your own tax and National Insurance to HMRC through a process called Self-Assessment. You must register for Self-Assessment as soon as you start working as a locum.

Key Tax Year Dates for Sole Traders:

• Tax Year: Runs from 6th April to 5th April.

• Registration Deadline: 5th October after the end of the tax year in which you started trading.

• Online Tax Return Deadline: 31st January.

• Tax Payment Deadline: 31st January.

Option 2: Operating as a Limited Company

As your income grows, you might consider setting up a private limited company. This creates a distinct legal entity that is separate from you, the individual. You become a director and shareholder of your own company.

Pros of a Limited Company

• Tax Efficiency: This is often the main driver. Instead of paying Income Tax on all profits, the company pays Corporation Tax (at a different rate). You can then pay yourself a combination of a small, tax-efficient salary and dividends, which can result in a lower overall tax bill.

• Limited Liability: Your personal finances are protected. If the company incurs debts or is sued, your personal assets (like your home) are not at risk. Liability is limited to the value of the company's assets.

• Professional Perception: Some feel that operating as a limited company presents a more professional image to clients and agencies.

Cons and Key Considerations

• Increased Administration: Running a limited company involves significantly more paperwork, including filing annual accounts with Companies House, a company tax return, and confirmation statements.

• Higher Accountancy Costs: Due to the complexity, you will almost certainly need an accountant, and their fees will be higher than for a sole trader tax return.

• IR35 (Off-Payroll Working Rules): This is a critical piece of tax legislation. It is designed to ensure that individuals who work like employees but operate through a company pay the correct amount of tax. If your contract is deemed to be 'inside IR35', you may be required to pay tax and National Insurance as if you were an employee, negating many of the tax benefits of a limited company. You must assess the IR35 status of every contract.

What Are Allowable Business Expenses?

Whether you are a sole trader or a limited company, your business can claim for allowable expenses. These are the costs incurred "wholly and exclusively" for business purposes. Claiming these reduces your taxable profit (for sole traders) or your company's profit before tax (for limited companies).

Here is a detailed list of common allowable expenses for UK locum pharmacists:

1. Professional Fees & Subscriptions

• GPhC Registration Fees: Your annual renewal fee.

• Professional Body Membership: Fees for organisations like the Royal Pharmaceutical Society (RPS).

• Indemnity Insurance: Premiums for your Professional Indemnity (PI) insurance. Read our  Insurance Guide to learn more.

• DBS Checks: The cost of your Disclosure and Barring Service checks.

2. Travel & Subsistence

• Mileage: Using your own vehicle to travel to temporary workplaces. The HMRC approved rate is 45p per mile for the first 10,000 miles and 25p per mile thereafter. You must keep a log.

• Public Transport: The cost of train, bus, or tube fares for business travel.

• Parking & Tolls: Any parking fees or road tolls incurred during business travel.

• Subsistence: The cost of reasonable meals and drinks purchased while on business travel.

3. Equipment & Office Costs

• Essential Equipment: The cost of items like a personal laptop, mobile phone, or specific medical equipment used for work.

• Stationery: The cost of pens, paper, printer ink, and postage.

• Use of Home as Office: A flat rate for using your home for business admin.

• Business Phone Calls: The cost of business-related calls.

4. Training & Development

• Continuing Professional Development (CPD): Costs for courses or training to maintain or update your existing professional skills.

5. Other Key Expenses

• Accountancy Fees: The cost of hiring an accountant.

• Bank Charges: Fees for a dedicated business bank account.

• Relevant Subscriptions: Costs for trade publications or online journals.

Keeping Good Records is Crucial

HMRC can investigate your tax affairs at any time. You must keep accurate and organised records of all your income and expenses for at least 5 years after the 31st January submission deadline of the relevant tax year. This includes all invoices, receipts, and bank statements.

Conclusion: Choose the Right Structure for You

Being a locum pharmacist offers great flexibility. For many, starting as a sole trader is the simplest and most effective option. As your career progresses, operating through a limited company may offer significant tax advantages, but this comes with greater administrative responsibility and the need to navigate complex rules like IR35. By keeping organised records and understanding your obligations, you can ensure you are compliant with HMRC and operating in the most efficient way possible.

Disclaimer: This guide provides general information for UK taxpayers and is not a substitute for professional financial advice. Tax laws and structures are complex and subject to change. We strongly recommend consulting with a qualified accountant to discuss your individual circumstances before deciding on a business structure.