Self-Assessment Tax for Locum Pharmacists
Whether you’ve recently qualified or have years of experience, starting work as a locum pharmacist comes with important tax considerations and we’re here to help guide you through your self-assessment tax return.
Sole Trader or Limited Company?
One of the first decisions you’ll face is whether to operate as a sole trader (self-employed) or set up a limited company.
Most locums choose the simpler sole trader route. It involves less administration and there's no requirement to file annual accounts with Companies House. Instead, you’ll need to keep a record of your income and business expenses to complete your annual Self Assessment tax return.
However, as a sole trader, you’re personally liable for any business debts, which means your personal assets are at risk if the business runs into financial difficulty.
By contrast, setting up a limited company limits your personal financial liability, as the company is a separate legal entity. Income tax is deducted from any director’s salary through PAYE. Tax is also payable on dividends received from the company, and the company itself pays Corporation Tax at a rate of 19%–25%, depending on profit.
Understanding Self-Assessment
Whether you're self-employed or run a limited company, you’ll likely need to submit a Self-Assessment tax return each year. The tax year runs from 6 April to 5 April, and the deadline to file and pay any tax due is 31 January following the end of that tax year.
If you’re a UK resident, your return must include your worldwide income, including any self-employment, employment, rental, interest, or dividend income.
How am I taxed as a self-employed individual?
You’ll need to register for Self-Assessment with HMRC by 5 October after the end of the tax year in which you became self-employed. You can do this online or by completing form CWF1. You’ll also need to register for National Insurance.
Your profits are taxed in the same way as employment income:
- You’re entitled to a personal allowance of £12,570 (2024/25) if your income is below £100,000.
- Income above this is taxed in bands:
- 20% on the first £37,700
- 40% on the next £74,870
- 45% on income above £125,140
If your income exceeds £100,000, your personal allowance is tapered. It reduces by £1 for every £2 of income above £100,000, meaning it’s fully withdrawn at £125,140. In effect, this creates a 60% effective tax rate on income between £100,000 and £125,140.
National Insurance contributions will also apply.
What expenses can I claim?
Claiming allowable expenses reduces your taxable income. As a locum pharmacist, you may be able to claim for:
- Professional memberships (e.g. GPhC, RPS)
- Equipment you’ve purchased to carry out your work
- CPD: courses, workshops, and seminars that enhance your professional skills
- Indemnity insurance
- Postage, accounting software, and stationery used for work
- Mileage: 45p per business mile for the first 10,000 miles, 25p thereafter (travel between home and a regular workplace isn’t claimable, but travel to different pharmacies can be)
- A business-use proportion of your mobile phone and home internet
- Pension contributions: These can reduce your taxable income if made into a qualifying scheme
How am I taxed as a director of a limited company?
Your tax position depends on how you take income from the company:
- Salary: Taxed as normal employment income (20%, 40%, 45%)
- Dividends: The first £500 (2024/25) is tax-free. Dividends above this are taxed at:
- 8.75% (basic rate)
- 33.75% (higher rate)
- 39.35% (additional rate)
Dividends aren’t subject to National Insurance. Your company must also pay Corporation Tax on its profits.
Key deadlines
- 31 January: Deadline to submit your tax return and pay any tax due.
- Missed deadlines can result in a £100 penalty, plus interest on unpaid tax.
Saving for tax
As a self-employed individual, tax isn’t deducted from your income at source. It’s important to set aside funds throughout the year. Your accountant can help you estimate how much to save, based on your income.
Record keeping
Good record keeping is essential. Keep copies of all invoices, receipts, and relevant documents to ensure your return is accurate and HMRC-compliant.
Need help?
As a locum pharmacist, understanding your tax responsibilities is essential—but you don’t have to do it all yourself. Get in touch with your usual Larking Gowen contact or email enquiry@larking-gowen.co.uk
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