Personal Tax Returns For Doctors: A Guide For Doctors, Nurses, NHS, And Locum Practitioners

Filing personal tax returns can be one of the most stressful aspects of a doctor's professional life, particularly for those balancing NHS employment with locum work. Understanding your tax obligations, key deadlines, and allowable expenses is essential to staying compliant, avoiding penalties, and ensuring your hard-earned income is managed efficiently.

At Halliday Styan, we help medical professionals navigate the complexities of self-assessment, tax planning, and financial record-keeping. In this guide, we outline the essential considerations for doctors in all employment scenarios, with a particular focus on NHS locums, and provide practical tips to make the process more manageable.

1. Understanding Self-Assessment and tax obligations

The Self Assessment system is the method by which HMRC collects income tax from individuals who have income outside of standard PAYE arrangements. For doctors, this is often relevant when working as a locum or when combining NHS employment with private practice.

Key dates for Self Assessment include:

• Registering for Self Assessment: 5 October following the end of the tax year in which you started self-employment. This ensures HMRC issues a Unique Taxpayer Reference (UTR) and the correct National Insurance contributions.
  
• Paper tax return deadline: 31 October.
  
• Online tax return deadline: 31 January.
  
• Payment on account: For tax liabilities over £1,000, HMRC may require advance payments of 50% of the previous year's tax, due 31 January and 31 July.
  

Missing these deadlines can result in penalties and interest charges, so keeping track of key dates is crucial. Many medical practitioners find professional support from an experienced accountant invaluable for staying on top of these responsibilities.

2. Employment structures and tax implications

Employed NHS workers

For medical staff employed directly by the NHS, taxes and National Insurance contributions (NICs) are handled through the PAYE (Pay As You Earn) system. Your employer deducts these amounts automatically, simplifying the process and ensuring compliance. This system also covers pension contributions, including NHS pension entitlements, so personal administration is minimal.

Self-Employed (Including Locums)

Self-employed locums carry greater responsibility. You must register with HMRC for Self Assessment, track income, and calculate your own tax and NICs. Key points include:

• Payment on account: Advance payments toward your expected tax liability can surprise new locums if not planned for.
  
• NICs: Class 2 and Class 4 contributions apply, depending on your profit levels.
  
• Record-keeping: Accurate logs of income, expenses, and pension contributions are essential.
  

Failure to keep organised records or pay tax on time can lead to penalties. At Halliday Styan, we assist medical professionals and NHS staff in setting up efficient systems for tracking income and expenses, helping to prevent common pitfalls.

Limited Company or Personal Service Company (PSC)

Some medical professionals choose to operate through a limited company, creating a separate legal entity for their locum work. Advantages include:

• Corporation tax: Paid on company profits, often lower than personal Income Tax for higher earners.
  
• Salary and dividends: Flexible extraction options can improve tax efficiency.
  
• IR35 considerations: If your contract is deemed "disguised employment," tax and NICs may be treated as employee payments, reducing the advantages of operating through a company.
  

While this structure can offer tax benefits, it also increases administrative responsibilities. Specialist accounting advice is often essential to optimise outcomes and ensure compliance.

3. Allowable expenses and tax deductions

For self-employed locums, claiming the correct expenses is one of the most effective ways to reduce tax liability. Expenses must be "wholly and exclusively" for the purpose of your medical practice. Common examples include:

• Professional fees and insurance: GMC registration, indemnity insurance, and subscriptions to medical bodies or journals.
• Medical equipment and supplies: Stethoscopes, diagnostic tools, and other necessary instruments.
• Travel and subsistence: Travel between different workplaces, excluding commuting to your main NHS site; travel to a temporary workplace.
• Home office costs: For administrative work undertaken from home.
• Professional services: Accountancy, bookkeeping, and specialist advice fees.
• Communications: Mobile phone, internet, and software used for locum work.

Keeping detailed evidence, such as invoices, receipts, and mileage logs, is essential. Using accounting software designed for locums can make this easier, ensuring accurate records for both HMRC and financial planning purposes.

At Halliday Styan, we help medical professionals track expenses efficiently and maximise legitimate claims, ensuring that every allowable deduction is accounted for.

4. NHS pension contributions and deadlines

NHS staff contributing to the NHS pension scheme need to be vigilant about deadlines and correct submission of contributions:

• Type A/B forms: For employer and employee contributions when invoicing as a direct NHS locum.
  
• Type 2 forms: Required if employed as a salaried GP or when combining multiple NHS roles.
  

Submitting forms late can result in rejected contributions or inaccurate pension records. Contributions are also tax-efficient, as they reduce taxable income while saving for retirement.

At Halliday Styan, we can support in administering pension contributions correctly and on time, minimising stress and maximising efficiency.

5. Top Tips for NHS Medical Professionals and Locums

1. Keep digital, accurate records: Store receipts, invoices, mileage logs, and pension documentation systematically.
2. Set aside funds for tax: Regularly save a percentage of income to cover payments on account and final tax liabilities.
3. Use specialist software: Tools designed for locums simplify bookkeeping, invoicing, and pension administration.
4. Separate bank account: A dedicated account for business income and expenses clarifies cash flow and makes accountant review easier.
5. Seek expert advice early: For IR35 issues, limited company setup, or complex pension scenarios, early guidance saves stress later.
6. Regularly review your structure: Your employment situation may change; periodic reviews ensure your tax approach remains efficient.

6. Conclusion

Filing personal tax returns and managing finances as a medical professional particularly as an NHS locum, doesn't have to be overwhelming. Understanding your obligations, keeping accurate records, and planning ahead are key steps to staying compliant and maximising your income.

At Halliday Styan, we provide tailored support to doctors and medical professionals, from self-assessment preparation and bookkeeping to pension administration and IR35 guidance. With the right support, taxes can be manageable, and you can focus on what matters most: patient care and professional development.

If you'd like personalised guidance or assistance with your tax return, our team of specialist medical accountants is here to help.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.