The locum pharmacist tax guide

Tax as a self-employed locum pharmacist is not complicated.

What you need to know

Once you understand the structure. The problem is that nobody really explains it clearly, and the cost of getting it wrong can be significant. This guide covers the main things you need to know.

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You need to register for Self Assessment

If your locum income exceeds £1,000 in a tax year, you are legally required to register for Self Assessment with HMRC and submit an annual tax return. Most locum pharmacists are well above this threshold.

Register online through HMRC's website as soon as you start locum work. Do not wait until close to the January deadline. HMRC will send you a Unique Taxpayer Reference (UTR) number by post, which you need to file your return, and this can take several weeks to arrive.

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Sole trader or limited company?

Most locum pharmacists start as sole traders, which is the simpler option. You pay income tax and National Insurance on your profits and file a Self Assessment return each year.

A limited company can be more tax efficient once your profits are consistently high, because you can take a combination of salary and dividends that reduces your overall tax bill. However, it comes with additional costs and administrative requirements: filing accounts with Companies House, corporation tax returns, payroll if you pay yourself a salary, and typically higher accountancy fees.

The crossover point where a limited company starts to make financial sense is usually somewhere around £40,000 to £50,000 in annual profit, though this depends on your personal circumstances. Get advice from an accountant who works with healthcare professionals before making the switch.

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What you can claim as expenses

Allowable expenses reduce your taxable profit. The rule is that expenses must be wholly and exclusively for business purposes.

Expenses that locum pharmacists can typically claim include:

Professional fees. Your annual GPhC registration fee is fully deductible. Membership of professional bodies such as the Royal Pharmaceutical Society is also claimable.

Professional indemnity insurance. Your indemnity premium is a legitimate business expense.

Mileage. If you use your own car to travel between pharmacies, you can claim mileage at HMRC's approved rate (45p per mile for the first 10,000 business miles in a tax year, 25p per mile after that, as of 2025 to 2026). You cannot claim for travel from your home to a regular, fixed place of work, but locums travelling to multiple different pharmacies typically can claim most of their travel. Keep a record of every journey.

Continuing professional development. Training courses, conferences, and study materials directly relevant to your pharmaceutical practice are claimable.

Equipment. Items you use exclusively for work, such as a clinical bag or professional equipment, can be claimed.

Accountancy fees. The cost of your accountant preparing your Self Assessment is itself a deductible expense.

Telephone and broadband. If you use your personal phone for work calls, you can claim the business proportion. If you have a separate business phone, you can claim the full cost.

You cannot claim for food and drink, personal clothing (including standard uniform that could be worn outside work), or travel from home to a regular workplace.

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Payments on account

This catches many first-year self-employed people off guard. If your Self Assessment tax bill exceeds £1,000, HMRC requires you to make advance payments towards the following year's bill. These are called payments on account, and they are each 50% of your previous year's bill, due in January and July.

In practice this means that in your first year of Self Assessment, if your tax bill is, say, £8,000, you will be asked to pay £8,000 for the year just gone plus £4,000 as the first payment on account for the following year. All due in January.

This is a cash flow shock that nobody warns you about. The solution is to set aside a portion of every payment you receive throughout the year as a tax reserve. A rough rule of thumb for most locum pharmacists is to set aside around 25% to 30% of your gross income for tax and National Insurance, adjusting based on your specific situation.

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VAT

Most locum pharmacists do not need to register for VAT. Dispensing and supply of medicines is VAT-exempt as a healthcare service. If your income exceeds £90,000 (the current threshold), you should take advice, but in practice most locums are not required to charge or reclaim VAT.

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Record keeping

HMRC requires you to keep records for at least five years after the Self Assessment deadline for the relevant tax year. In practice this means keeping records of all your income (invoices, payments received), all your expenses (receipts, mileage logs), and your bank statements.

Keeping these in order throughout the year rather than reconstructing them before your return saves a significant amount of time and reduces errors.

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Sessional (sessional.co.uk) includes expense tracking with HMRC mileage rates, earnings overview, and a tax planning tool for locum pharmacists. Free to start.

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This guide reflects the tax position for the 2025 to 2026 tax year. Tax rules change. The information here is for general guidance only. For advice specific to your circumstances, speak to a qualified accountant.