Critical: 10-Week Deadline
NHS pension contributions for freelance locum work must be submitted within 10 weeks of the work ending. After this deadline, the work cannot be made pensionable and will be rejected.
Locum Work: IR35 & Pension Eligibility Quick Guide
| Employment Structure | IR35 Status | NHS Pension Eligible | Tax Treatment |
|---|---|---|---|
| Direct with NHS Trust/CCG | PAYE + NI | ||
| Agency (Inside IR35) | PAYE + NI | ||
| Umbrella Company | PAYE + NI | ||
| Limited Company (Outside IR35) | Corp Tax + Dividends | ||
| Freelance GP Locum (Directly) | Outside IR35 | Self-Employed |
Understanding IR35 Rules
What is IR35?
IR35 (off-payroll working rules) determine whether you should be treated as an employee for tax purposes, even when working through an intermediary like a limited company or agency.
Inside IR35 (Deemed Employment)
You're likely inside IR35 if you:
- •Work set hours determined by the engager
- •Must personally do the work (no substitution rights)
- •Work under direct supervision and control
- •Use engager's equipment and resources
Tax Treatment: PAYE + National Insurance deducted as if employed
Outside IR35 (Genuine Contracting)
You're likely outside IR35 if you:
- •Have genuine substitution rights
- •Control how, when, and where you work
- •Take financial risk (equipment, insurance, etc.)
- •Work for multiple clients simultaneously
Tax Treatment: Corporation Tax + dividend tax efficiency
NHS Pension Eligibility Rules
✅ Pension Eligible Scenarios
- Direct engagement with NHS employer
- Freelance GP locum work (direct to practice)
- Bank staff employed directly by NHS
Contribution Rate: Employee contribution is tiered (currently 5.2% to 12.5%) plus employer contribution
❌ NOT Pension Eligible
- Limited company invoicing
- Umbrella company employment
- Agency employment (even if inside IR35)
Alternative: Personal pension contributions up to £60,000 annually
Freelance GP Locum Pension Process
Step-by-Step Process
Complete the Work
Ensure all locum sessions are properly documented with dates and fees.
Calculate Contributions
Calculate both employee and employer contributions:
- • Pensionable pay = 90% of locum fee
- • Employee contribution = based on tiered rates
- • Employer contribution = 23.7% (check latest NHSBSA updates)
Submit Within 10 Weeks
Submit pension application to PCSE/LHB no later than 10 weeks after work ended.
Pay Contributions
Pay both employee and employer contributions by 7th of following month.
Alternative Pension Options (Non-NHS Eligible Work)
Limited Company Directors
- •Annual allowance: £60,000 (same as NHS)
- •Tax-deductible business expense
- •Reduces corporation tax liability
- •SIPP or executive pension schemes
Umbrella Company Workers
- •Workplace pension (if offered)
- •Personal pension contributions
- •Limited tax relief (20% basic rate)
- •Consider additional voluntary contributions
Tax Planning Strategies
Mixed Employment Strategy
Many doctors combine NHS employment with locum work. This requires careful annual allowance management:
- • Monitor combined pension input amounts
- • Use carry forward if approaching limits
- • Consider timing of additional contributions
- • Plan for tapered allowance if high earner
Limited Company Efficiency
For genuine outside IR35 contracts, limited companies offer tax efficiency:
- • Corporation tax: use current marginal relief bands (small profits, marginal, main rate)
- • Dividend tax: 8.75% basic, 33.75% higher rate
- • Pension contributions: Tax-deductible business expense
- • Salary optimisation: Pay just enough for NI credits
Locum evidence pack
Contracts, rota confirmations, right-of-control evidence, substitution terms, and any agency or umbrella company paperwork.
Payslips, invoices, pensionable/non-pensionable pay evidence, and confirmation of whether the work is NHS Pension Scheme eligible.
Expense records, travel patterns, indemnity costs, professional fees, and equipment costs for accountant review.
P60s and Pension Savings Statements so additional locum work can be tested against annual allowance and tapering.
Official sources
Use these official references alongside this guide. Rules and rates can change, so check the underlying source before making decisions.
HMRC Employment Income Manual
HMRC technical guidance on employment income status and tax treatment.
GOV.UK Self Assessment
Official tax return registration, filing, and payment guidance.
GOV.UK National Insurance
Rules for NI contributions and credits across employment patterns.
NHS England GP contract hub
Useful contractual context for NHS GP and primary care arrangements.
Continue your planning journey
These related guides cover the next questions that usually come up after this topic.
Ready to Plan Your Locum Tax Strategy?
NHS Financial Planner includes tools to help assess IR35 considerations, calculate optimal pension contributions, and plan your tax strategy across multiple income streams.