Becoming a Limited company locum doctor

With the National Health Service (NHS) spending £83.3 million on locum doctors for ‘Accident and Emergency departments’ alone (2013), it comes as no surprise that more doctors are deciding to make the move from permanent employment to locum status. This rise in spending has grown year on year for locum services, with a 60% increase over the past three years.

But what are the benefits of making the move from permanent employment to locum? In SJD Accountancy’s 2014 contractor attitude survey over 86% of our 1,000 responses said they enjoy the benefits of contracting to the extent that they are likely to remain in contracting for the foreseeable future.

Our easy to read guide lists some of the benefits of becoming a locum doctor, expected rates of pay and answers to some basic tax questions. You may also find our finding work as a locum doctor article useful.

Benefits of becoming a locum doctor

There are many benefits to becoming a locum doctor that could make it a cost-effective and advantageous career move, some of which are listed below.

Higher rates of pay

In 2013 The Telegraph documented that the NHS spent over two billion pounds in a three year period on locum doctors, with some locum doctors being paid over £2,000 for a 24 hour shift.

While £2,000 per shift is a rarity, locum doctors can usually command higher rates of pay than if they were a permanent employee, sometimes double. This is because your client does not have to pay personal and employee tax (which they would be required to pay if you were permanent), offer company pension contributions, pay for your holiday or your sick pay. All of these factors mean that there is greater scope to negotiate your salary with your client.

Naturally the amount you are paid will be based on your experience, education and the demand in your area. Below are some examples of current contracts to give you a clearer idea of the amount that you could earn as a locum doctor (based on 2014 availability).

GP Jobs
GP Locum - Blackburn

£500 - £600 per day

Role duties:

  • Paperwork including prescriptions, referral letters and scripts. 
  • 5 surgery hours.
  • Home visits.

NHS Jobs
Paediatrics Locum Doctor – Yeovil

£1,338 per week

Role duties:

  • Work as part of a team to cover for acute in-patients and the Special Care Baby Unit.
  • The role will also require some out-patient work.
  • 12 months fixed term contract to cover maternity leave. 

Of course these rates will be subject to tax and national insurance contributions. For a better idea of what you could take home as a locum doctor, visit our how much can I earn as a contractor page or visit our take home pay calculator if you have a rate in mind.

Increasing demand in the market

From 2009 the European Union restricted the number of hours that permanent doctors can work leaving the NHS with increased staffing shortages. To maintain their round the clock care the NHS has become increasingly reliant on locum doctors, who provide a simple, minimal commitment method to handle any staffing gaps. The high demand for locum doctors makes this a hugely desirable niche to work in, if you would like more information on how to find your first contract please read our finding work as a locum doctor article.

Flexible working hours

As a locum doctor you can pick and choose the shifts or contracts that you accept so that your work fits around any other commitments you may have. This makes locum work ideal for those with children, retired doctors and those who would generally like to work part time – it is also generally much easier to change contracts than to change job roles. 

Advance your skill set

Working as a locum gives you the opportunity to advance your skill set in a short space of time by working for many different departments and trusts building up your skill set. This means you could see a greater number of patients than you would as a permanent employee whilst also giving you an insight into how different practices and cultures work. This has the potential to make you a more desirable candidate to future employers.

Locum work can be particularly beneficial for junior doctors who commonly choose to spend a period of time working as a locum once they have completed their foundation year. The variety of experience that locum work provides will help junior doctors decide on the area of medicine they would like to specialise and further their career in.

Basing yourself in a number of locations will also provide the chance to network and make contacts, which will make the process of finding new contracts and locum shifts more straightforward as you go on.


With seven billion people on the planet wherever you go in the world there are people that will require the services of a doctor. Your doctor’s licence could be your passport to the world, with many opportunities for locum doctor roles located overseas.

If you wish to make the move to warmer climes then a great place to start is with a specialist recruitment agency such as Latitudes Group International, who position locums throughout Australia.

If you would still like to travel, but remain a little closer to home the NHS advertises for locum positions nationwide. So wherever you would like to base yourself you should be able to find a role as a locum. 

Time to study

As a doctor you never stop learning. With new medical treatments becoming available, being up-to-date with the latest advances in your field can be a challenge. The flexibility that locum work provides means that you have complete control over when you work, so you can plan your shifts around further studies and exams.

Excellent opportunity for retired doctors

The many benefits that locum work provides such as flexibility and generous rates of pay mean that many doctors decide to take up locum work when they have retired from their full-time position.

Medicine is a profession that is constantly evolving, which is one of the reasons why it is such an exciting career path. Just because you may want to take a step back from full-time work doesn’t mean that your passion for medicine has lessened. After spending so many years studying and training in a specific field, locum work provides many retired doctors with the chance to stay up-to-date with the most recent advances.  

Consultant roles for those with extensive knowledge, experience and expertise are generally the most in demand locum positions and well suited for retired doctors, whose wisdom can drive improvements where it is needed.

If you would like more information on the benefits of contracting you might find our comprehensive guide to contracting page useful. 

Moving from permanent to locum - Limited company or Umbrella company?

As a locum doctor you have the choice of working as director of your own Limited company or through an umbrella company.

If you were to work through an umbrella company you would effectively be an employee of that company as they are responsible for taking the salary from your client and paying it on to you with all necessary tax and National Insurance deducted.

Working through a Limited company is widely considered to be the most tax efficient way of working and allows greater opportunities for tax planning. Forming a Limited company is a straightforward process, which is usually completed the same day. For more information please visit our Limited company formation page.  

The best way to work as a locum will vary depending on your contract, so it is a good idea to discuss your individual circumstances with a professional who can recommend the best option for you. Alternatively, click on the following link to read our easy to read guide which lists the pros and cons of working through your own Limited company vs. PAYE Umbrella.

As a Limited company locum doctor you are entitled to claim business costs such as travel, uniform, text books and equipment for example stethoscopes as expenses. For more information on what costs are classed as an expense and the process involved in claiming expenses take a look at our Contractor’s Guide to Expenses page.

We find that many of our clients choose to work through their own Limited company because they can add cover to insure their business through professional indemnity insurance.

Locum doctors who are contracting for the NHS are usually covered by the NHS indemnity cover. However, this cover does not necessarily extend to locums working in a private hospital or in general practice. Due to the nature of working as a doctor it is important to ensure that you do not put yourself at risk and consider taking cover if it is not provided. Visit our professional indemnity insurance hub for more information on what cover you may need as a locum.

Does IR35 apply to locum doctors?

IR35 is a legislation introduced by HMRC to tackle ‘disguised employment’. This is to prevent those working on a contractor basis receiving the same benefits that full-time employees do.

Like all other contractors, freelancers, consultants and interims, if you are planning to work through your own Limited company then you will need to confirm whether your contract is classed as ‘inside’ or ‘outside’ of IR35.

When working ‘outside’ IR35 you will receive the full benefits and rewards when working as a legitimate Limited company contractor. If your contract is deemed ‘inside’ IR35, then you will be limited to the benefits you receive as a contractor and be required to pay full tax and NI – visit our Guide to IR35 for more information.

If you are unsure whether your contract falls inside or outside or IR35 why not take advantage of our free verbal IR35 review service. We also offer a paid for review by one of our specialist accredited accountants – visit our IR35 Contract Review Service.

Do I need to charge VAT for my services?

It is probably best to speak to an accountant about your individual situation, but as a general rule locum doctors are not required to charge VAT for their services. This means that you cannot register for the flat VAT scheme and so there will be less paperwork for you to complete.

HMRC state that health professionals are not required to charge VAT when they meet the following two conditions:

  • They are providing a service that they are registered to practise.
  • The primary purpose of the service that they provide is the ‘protection, maintenance or restoration of the health of the person concerned’.

This is of course a rule of thumb and would always recommend seeking professional advice.

Do I need an accountant?

When you start working as a locum doctor you may wish to appoint an accountant to support you with all your taxation requirements. An accountant will guide you through the process of forming a Limited company; yearend accounts and advice on what expenses you are entitled to claim.

SJD accountancy is an award winning, specialist contractor accountancy firm. We currently have over 15,000 contractor clients on our books including a number of locum doctors. We offer a fixed fee, all-inclusive accountancy package, which includes unlimited access to your own dedicated accountant. Our accountancy package also includes assistance when dealing with HMRC, tax deadline reminders and dividend administration.

For more information about the services that SJD Accountancy provides please visit our why choose SJD Accountancy page.

If you would like more information about becoming a locum doctor, forming a Limited company or contracting in general please contact our New Client Services Team on 01442 275789  or email

We hope you have found our becoming a locum doctor guide useful. For more information you may find our finding work as a locum doctor or accountants for locums pages useful.

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SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

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If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

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*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.