Specialist advice for Locum Doctors

Working as a Locum can give you flexibility and a varied work experience, but making sure you are being paid correctly and not storing up trouble with HMRC can be more difficult, which is where we can help.

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Umbrella Company for Locums

Umbrella companies ‘Off Payroll’ working

An umbrella company offers many of the benefits available through a limited company but without the administrative burden.

The umbrella company employs the locum and does the following:

  • Invoices your agency or client for the hours you have worked.
  • Calculates and deducts tax and national insurance.
  • Pays you.
  • Complies with all the company’s statutory requirements on your behalf including corporation tax.
  • Usually provides employer’s liability insurance, professional indemnity insurance and public liability insurance.

You can offset certain expenses if you use an umbrella company but not as many as if you trade through a limited company (personal service company).

You will have a contract with the umbrella company. The umbrella company holds the assignment contract with the agency or client. Often umbrella companies offer contributory pension schemes, medical cover and other benefits. However, you will not be able to make contributions to the NHS pension scheme.

If you work through an umbrella company your contracts will almost certainly be treated for tax purposes as if IR35 applies to them.

Contractor Loan Scheme / Disguised Remuneration Schemes

There are a few umbrella companies offering ‘Contractor Loan Schemes’ also known as ‘Disguised Remuneration Schemes’. Often these arrangements are claimed to be ‘Approved Tax Schemes’ and offer locums the opportunity to pay as little as 10% of their gross pay in tax and national insurance contributions. However, the phrase ‘Approved Tax Scheme’ usually means that the tax scheme or arrangement has been approved by a tax barrister working for the umbrella company. These schemes have never been approved by HMRC.

HMRC are clamping down on tax avoidance schemes and have made it very clear they intend to challenge any company considered to be actively encouraging tax avoidance.

If a tax scheme appears to be ‘too good to be true’ it probably is!

Instead of making a tax saving you could find yourself with a large tax bill shortly.


Agencies are generally happy to pay locums through umbrella companies. An agency will not be held responsible for unpaid tax and national insurance if a locum uses a ‘Contractor Loan Scheme’ arrangement. Unpaid tax is always the responsibility of the locum.


Contact us for specialist medical accountancy services for Locums

If you’re looking to plan your finances for the future or trying to find an answer to a problem then get in touch today.



Are you in danger of being hit with a huge tax bill on your pension growth? Our NHS Pension Review Service can provide an advance warning of impending pension issues.

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HMRC have increasingly got GPs in their sights and many Practices have been subject to lengthy tax investigations. Make sure you’re covered with our annual insurance scheme.

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Talk to one of our Medical Accounting Team for free. We can discuss your circumstances and how we can help you achieve better financial management, reduce your tax bills or plan for the future with a tailored fixed price plan.

Meet our team

We have a panel of subject experts and a team of professional accountancy support staff to make sure your specific needs are met reliably and cost effectively.


A specialist healthcare team to advise you
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Members of AISMA - Association of Independent Specialist Medical Accountants

What our clients say…

Dr Ravi Bansal, Locum GP

I’ve been with Nichols and Co for nearly 10 years with Debra being my accountant. I first contacted them when I received letters for tax arrears due to the wrong tax codes being applied during my hospital jobs.

Debra sorted this matter out and has always provided helpful and honest advice regarding tax matters. She has also helped my wife with her tax returns. I would definitely recommend their services for accounting matters with a special interest in helping doctors with their tax affairs. They are approachable, helpful and efficient.

Dr Jayran Mistry, Locum

Thank you for everything you at Nichols & Co have done for me with regard to my tax returns to date. I have always felt I am able to approach you with any question and that the answer is always helpful and thorough.

I am very grateful for how detailed, clear and efficient you are with tax returns and letters and for expediting things when needed. Every time I make contact with you I am met with polite staff and helpful advice and I have spoken with many of my friends about the service you provide and how good I think it is. I always recommend you. Thanks very much again, I really appreciate your hard work and help.