Locum nurse pay: agency, umbrella, or direct? A worked example

The rate you see advertised is almost never the rate you bank. For locum nurses the difference between a headline £30 per hour and what hits your account can be ten pounds or more once deductions run. Here is a worked example for a Band 5 nurse covering a weekend long day.

The shift

A 12-hour weekend long day on a Band 5 ward. The framework rate for a weekend long day is roughly £27 per hour. Total headline: £324 for the shift.

Route 1: NHS bank (direct PAYE)

The trust pays you as an employee for that shift. NI and income tax come off in the usual way. Standard deductions for a basic-rate taxpayer are roughly:

• Income tax (20% above personal allowance, pro-rated): around £65
• Employee NI: around £26
• Net to bank: around £233

Plus you accrue holiday pay, pension if opted in, and protected employment rights. Most stable option; lowest admin.

Route 2: Agency umbrella

The agency wins the booking. They pay you through an umbrella company. Headline rate is usually higher at £31–£33 per hour to account for umbrella costs. Let us say £32 per hour, total £384.

Then:

• Umbrella fee: £15–£25 per week (often deducted per-shift pro-rata)
• Employer NI (passed to you through the umbrella): around £38
• Apprenticeship levy: around £2
• Holiday pay: rolled up but shown separately
• Income tax: around £64 on the remaining
• Employee NI: around £26
• Net to bank: typically £210–£220

Umbrella companies must disclose all these deductions on a payslip. Read it. The headline rate is about to become a real number somewhere £20 below it after fees and employer-side costs get rolled through.

Route 3: Agency direct PAYE

Some agencies pay you on their own payroll as an employee, not via an umbrella. Same deductions as route 1 but the agency controls placements. Headline rate sits between route 1 and route 2: around £29 per hour, total £348, net around £250.

Route 4: Direct self-employment invoicing private clinic

Only applies to private, non-NHS settings. You invoice the client for £32 per hour, total £384. You pay:

• Income tax on profit at 20% basic rate (above personal allowance): around £64
• Class 4 NI at 6% on profit: around £21
• No NI employer cost; you keep any difference
• Net: £299 (you pay the tax and NI separately in January)

Plus you need to log that shift in your self-employment records, claim any travel expenses, and file Self Assessment.

What these numbers do not include

• Your time setting up the umbrella and dealing with its support
• The real cost of chasing late agency payments
• Holiday accrual that NHS bank includes but umbrella monetises differently
• Pension contributions (NHS bank is usually the best deal on pension; umbrella is the worst)
• Mileage to site at 45p per mile if you are self-employed

What to take away

Read the umbrella payslip. If you see "employer NI" listed as a deduction from your headline, that is your money being used to pay the employer side of NI, the umbrella essentially passed the cost to you. This is legal but should be visible and factored into your effective rate.

Across a year, NHS bank usually nets more than agency umbrella for the same number of shifts at advertised rates, because the fees compound. Agencies win on flexibility, access to shifts, and geographic reach. Direct invoicing wins on net pay but only exists in private settings.

Sessional lets you log every shift with the route and the effective rate so you can compare across a month what each channel actually paid. See our locum nurse page for the full set of tracking features.