Autumn Budget 2025 for UK locums: what actually changed

The Autumn 2025 Budget was short on surprises and long on freezes. For self-employed UK locums the consequences are concrete, even where nothing new was announced.

1. Personal allowance and income-tax thresholds frozen to April 2031

The personal allowance stays at £12,570 and the higher-rate threshold at £50,270 for rUK (England, Wales, Northern Ireland) until April 2031. Scotland sets its own thresholds separately.

What this means: with inflation, more of your locum income gets pulled into higher bands each year. A GP on £85,000 in 2026 who gets a 3% uplift to £87,550 in 2027 does not pay 3% more in tax, they pay roughly 4.4% more, because every extra pound is at 40%. The "fiscal drag" is real and compounds over the remaining years of the freeze.

Action: if you are close to £50,270 or £100,000, consider topping up your pension to keep taxable profit below the thresholds.

2. Dividend basic and higher rates up by 2% from April 2026

The dividend tax rates rose: basic rate is now 10.75% (was 8.75%), higher rate 35.75% (was 33.75%). Additional rate unchanged at 39.35%.

What this means: for locums operating through a limited company and drawing dividends, the tax gap between limited-company and sole-trader operation narrowed. A locum GP drawing £50,000 in dividends now pays about £1,000 more than in 2025/26.

Action: re-run the limited-company-vs-sole-trader maths if you chose the structure partly on dividend rates. Break-even gross income for a limited company has crept up.

3. Class 2 remains voluntary above the Small Profits Threshold

No change here but worth restating: self-employed people with profit above the Small Profits Threshold (£7,105 for 2026/27) no longer pay mandatory Class 2 National Insurance. You can still pay voluntarily to preserve state-pension qualifying years, at £3.65 per week that is £190 a year, and most locums who were short of qualifying years found it worth the cost.

Action: check your National Insurance record at gov.uk. If you have any missing qualifying years near the 35 needed for a full state pension, a voluntary Class 2 payment is the cheapest way to top up.

4. Employer National Insurance stays at 15% / £5,000 threshold

Locums operating through a limited company and paying themselves a salary deduct employer NI on everything above the secondary threshold of £5,000. The rate is 15% and the threshold holds until 2030/31.

What this means: the "low salary, high dividend" strategy for limited-company locums is less efficient than under the old £9,100 threshold. Salary of £5,000 is the new sweet spot for most.

5. Corporation tax and marginal relief unchanged

Small-profits corporation tax stays at 19% up to £50,000 profit. The main rate is 25% above £250,000. Marginal relief applies between the two using MR = F × (U − N), with the fraction 3/200. No locum reaches the £250,000 main-rate threshold on clinical work alone, so marginal relief is what matters.

Action: if your limited company profit is bumping against £50,000, a pension contribution reduces taxable profit and can keep you in the 19% band.

What to do this tax year

• Set aside 30–35% of gross income for tax, NI, and pension. Our take-home calculator gives you a year-specific number.
• Check your NI record before April 2027. Most missing years can only be filled until six years after they occurred.
• If you trade through a limited company, have a 30-minute call with your accountant about the new dividend rates before you set drawdown for 2026/27.

This is general guidance, not advice for your circumstances. Run the specifics with a qualified accountant before any decision with tax consequences.