Locum, Bank and Extra Income

Most resident doctors (formerly junior doctors) pick up extra work at some point, whether that is NHS bank shifts, agency locum work, or income from outside medicine. How it is taxed depends on how you are engaged.

This guide explains the tax treatment of extra income and when you need to tell HMRC about it.

How Extra Work Is Taxed

NHS Bank Shifts

You are employed for these, so tax and National Insurance are deducted through PAYE before you are paid. Bank work is usually pensionable. Watch your tax code: a second assignment often gets a BR (basic rate) code, so it may be taxed more heavily at first. This usually balances out over the tax year.

Agency Locum Work

Agency shifts are normally paid through PAYE by the agency, so tax and National Insurance are taken at source in the same way.

Self-Employed Locum Work

If you invoice directly (more common in general practice or private work), you are self-employed for that income. You register with HMRC, pay tax and National Insurance through Self Assessment, and can deduct allowable business expenses.

Working Through a Limited Company

If you provide services through your own company, the off-payroll working rules (IR35) usually apply. The engaging trust issues a Status Determination Statement. If the work is judged "inside IR35," tax and National Insurance are deducted as if you were employed.

The £1,000 Trading Allowance

The first £1,000 of gross self-employed or casual income in a tax year is tax-free. If your gross trading income is £1,000 or less, you usually do not need to tell HMRC about it. Above £1,000, you can deduct the £1,000 allowance instead of your actual expenses, whichever gives the better result.

When You Need Self Assessment

You need to file a Self Assessment tax return if, in the tax year, you:

  • Were self-employed and earned more than £1,000 (before expenses)
  • Had untaxed income such as rent, dividends, savings interest, or foreign income above the relevant limits
  • Owed Capital Gains Tax or the High Income Child Benefit Charge
  • Received a notice from HMRC to file

Note: The old rule that PAYE earners over £100,000 automatically needed Self Assessment has been removed. If all your income is taxed through PAYE and you have no other reportable income, you may not need to file at all.

Key Deadlines

  • 5 October: Register for Self Assessment after the end of the tax year the income arose
  • 31 January: File your online return and pay the tax due
  • 31 July: Second payment on account, if you make them

Tip: Set aside roughly 30-40% of self-employed income for tax as you go, keep records and receipts, and check your tax code if you have more than one employment.

Related Resources