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Locum work, taxed properly

The question that decides most of your tax is not about you at all — it is how big the practice engaging you happens to be. Get that wrong and you can be operating the wrong regime for half your bookings.

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Which IR35 regime applies: The practice's sizeDecides it — not your day rate, your company or your contract
RCVS renewal 2026–27: £431On or before 30 April; £468 if paid in May
MTD for Income Tax: £50,000 grossFrom 6 April 2026 — turnover, not profit
Class 4 National Insurance: 6%From £12,570 to £50,270, then 2% above

IR35 turns on the practice's size, not yours

There are two off-payroll regimes and which one you are in has nothing to do with your day rate, your company, your contract wording or how many practices you work for. It is decided by the size of the client.

Chapter 8, ITEPA 2003 — the original IR35, in place since 2000. Where the client is small, your own intermediary decides your status and carries the tax risk.
Chapter 10, ITEPA 2003 — off-payroll working, reformed from 6 April 2021. Where the client is medium or large, the client determines status, must issue a Status Determination Statement, and the fee-payer operates PAYE on the fee.

gov.uk, off-payroll working for clients

“If you're a small-sized client in the private and voluntary sectors you will not have to determine the employment status of workers you engage through their own intermediaries. This will remain the responsibility of the worker's intermediary.”

Map that onto the veterinary market and it produces an unusually clean split. The CMA's verified data shows 76% of veterinary businesses have only one first opinion practice, so the overwhelming majority of independents will be small clients — and the status decision on that work sits with your company. All six large groups — CVS, IVC Evidensia, Linnaeus, Medivet, Pets at Home and VetPartners — will be medium or large, so they must issue Status Determination Statements and their fee-payers must run PAYE.

A locum who covers a mix of independents and corporate sites is therefore in two different regimes in the same tax year. That is not a mistake to be corrected; it is the correct position, and it means two sets of paperwork and two sets of expectations about what arrives in the bank.

The threshold rise, and why it has not bitten

From 6 April 2025, two of the three Companies Act size criteria increased: turnover above £15 million (from £10.2 million) and a balance sheet total above £7.5 million (from £5.1 million). The 50-employee limit is unchanged. It applies to financial years beginning on or after 6 April 2025.

HMRC's own manual is explicit about the consequence: the earliest tax year the transitional provision will affect a client is 2027/28, because the earliest possible filing date for an accounting period beginning on or after 6 April 2025 falls in January 2027. So a practice that is medium or large today is still medium or large for your current engagement, however much its turnover moved.

Where a status decision genuinely has to be made, CEST is the only tool HMRC will stand behind, and it does so only as long as the information used remains accurate and in line with HMRC's guidance. There is no sector-specific HMRC guidance for veterinary locums at all: the general test applies, which is whether you would have been an employee of the client had the engagement been direct.

Self-employed

What the year actually costs on 2026/27 rates

As a sole trader you pay income tax on profit and Class 4 National Insurance on the same figure. Class 2 is voluntary at £3.65 a week, and profits above the £7,105 Small Profits Threshold give you the National Insurance credit without paying it.

An illustrative example. A locum invoices £70,000 in 2026/27 and has £8,000 of allowable expenses, so taxable profit is £62,000.

Line	Working	Amount
Taxable income after the personal allowance	£62,000 − £12,570	£49,430
Income tax at 20%	£37,700 × 20%	£7,540.00
Income tax at 40%	£11,730 × 40%	£4,692.00
Class 4 at 6%	£37,700 × 6%	£2,262.00
Class 4 at 2%	£11,730 × 2%	£234.60
Total		£14,728.60
Left after tax	£62,000 − £14,728.60	£47,271.40

Illustrative figures on 2026/27 rates, ignoring student loan repayments and any other income. Two things fall out of it. The marginal cost of the last pound is 42%, so a decision to work one more week is a 58p-in-the-pound decision. And the Making Tax Digital test is run on the £70,000, not the £62,000 — which is the next section.

Then there are payments on account, and the second year is the one that stings: your first year of self-employment carries none, so year two arrives as a balancing payment for year one plus two instalments, all inside twelve months. The take-home calculator works your own numbers, and the locum accounts page covers the expenses that genuinely apply to clinical work.

Making Tax Digital

It started on 6 April 2026, and it is tested on turnover

Making Tax Digital for Income Tax is not a proposal any more. It began on 6 April 2026 for sole traders and landlords with qualifying income over £50,000, tested on the 2024/25 return. Around 780,000 people are in the first tranche.

Qualifying income over	Tested on	Mandatory from
£50,000	2024/25	6 April 2026
£30,000	2025/26	6 April 2027
£20,000	2026/27	6 April 2028

The definition is where locums get caught. Qualifying income is gross income from self-employment and property, before any allowances or expenses. It is your invoiced turnover, not your profit. A locum billing £62,000 and netting £40,000 after expenses is over the threshold. HMRC checks the Self Assessment return for the relevant year, so the previous year's return determines the obligation.

Once you are in, quarterly updates replace nothing — the annual return still happens — and the periods are cumulative from 6 April, which surprises people who expect four discrete quarters.

Update period	Deadline
6 April to 5 July	7 August
6 April to 5 October	7 November
6 April to 5 January	7 February
6 April to 5 April	7 May

Updates can go in any time from the end of the period to the deadline, and up to ten days early where no further transactions are expected. Exemptions exist, digital exclusion among them. And one clean structural point: a locum working through a limited company is outside the regime entirely, because it applies to sole traders and landlords rather than to companies. That is a genuine consideration in the structure question, though rarely the deciding one — see the MTD guide and the compliance calendar.

Through a company

What incorporating changes, and the allowance you probably will not get

A limited company changes five things at once, and it is worth being clear which of them actually move money.

Corporation tax at 19% on profits up to £50,000, 25% above £250,000, and an effective 26.5% between — with both limits divided by one plus the number of associated companies.
Dividends at 10.75%, 35.75% or 39.35% from 6 April 2026, with a £500 allowance. The ordinary and upper rates each rose two percentage points on 6 April 2026.
Employer National Insurance at 15% above a £5,000 secondary threshold. The old low-salary strategy was built around a £9,100 threshold; at £5,000 it costs more.
Capital allowances. The £1 million Annual Investment Allowance is available to companies, sole traders and partnerships alike. Full expensing — a 100% first-year allowance on new and unused main-rate plant and machinery, uncapped, and 50% on special-rate expenditure — is companies only. Second-hand kit is outside full expensing but inside AIA.
Making Tax Digital for Income Tax does not apply. Companies are outside it.

The £10,500 that is not yours

The Employment Allowance is generally not available to a one-person company. The rule is explicit: if the company has only one director, that director must not be the only employee liable for secondary Class 1 National Insurance. It is also unavailable for workers within the off-payroll working rules. So the £10,500 headline is real, and it is not for you — which changes the salary level a locum company should be running.

And where a corporate group engages you under Chapter 10, the mechanics change again: the fee-payer deducts PAYE and National Insurance at source and your company receives a net fee. The deemed employment payment machinery of Chapter 8 does not apply to that engagement at all. Run both routes on your own numbers with the incorporation calculator, and read the IR35 guide before you sign anything with a group.

The regulatory side

Registration, insurance, and the duties that follow you

Four things attach to you personally rather than to whoever is paying the invoice.

Registration. £431 for 2026–27, due on or before 30 April 2026; £468 if paid between 1 and 31 May; removal from the Register if unpaid by 31 May. Non-UK-practising £214, non-practising £71. Section 343(2) ITEPA 2003 makes a fee for entry or retention of a name in the register of veterinary surgeons, or the supplementary veterinary register, deductible from employment income — the provision names the registers rather than the professional associations.
Professional indemnity. The Code requires all your professional activities to be covered. The RCVS warns locums specifically that the host practice's policy is likely to cover negligence claims but may not provide any other type of cover. That gap is not theoretical: representation in an RCVS concerns investigation is not a negligence claim.
The 24-hour duty. Chapter 3 of the RCVS supporting guidance applies to all veterinary surgeons in practice, locums included: you must take steps to provide 24-hour emergency first aid and pain relief according to your skills and the situation. Taking steps does not mean providing it personally and continuously, but clients must be directed to appropriate alternative services.
Under care. The obligation attaches to the vet who accepts responsibility for the animal, not to the practice — so it follows you, including the requirement to be able, on a 24/7 basis, to arrange physical examination, whether yourself or through another provider under written agreement. Physical examination is still required for a suspected notifiable disease, for antimicrobials in non-agricultural animals and for controlled drugs on first prescription, except in exceptional circumstances.

One thing that does not attach to you: the CMA's Order. Its obligations fall on veterinary businesses operating first opinion practices, out-of-hours centres, referral centres, crematoria, laboratories, online pharmacies and pet care plans. A locum is not a veterinary business. A sole-practitioner first opinion practice is one, and is a Small Veterinary Business.

How this profession is actually regulated

The RCVS regulates vets. It does not regulate practices.

There is no ownership restriction

Non-vets have been able to own a UK veterinary practice since 1999, and the RCVS has no statutory power to regulate the businesses vets work in — only the individual veterinary surgeons and veterinary nurses on its registers. The Practice Standards Scheme is, in the RCVS's own words, a voluntary accreditation.

The CMA identified exactly this in its final report of 24 March 2026: that the system of regulation applies only to veterinary professionals and not to the businesses in which they work.

One registration is compulsory

If your practice supplies or stores medicines you must register the premises with the RCVS, which holds the Register of Veterinary Practice Premises on behalf of the VMD. The fee is per premises — a main site and two branches is three registrations — at £38 a year in England and Wales, VAT exempt, renewing on 1 April.

Defra's consultation on reforming the Veterinary Surgeons Act 1966 closed on 25 March 2026 and proposes licensing veterinary businesses. The response has not been published and nothing is in force.

Locum FAQs

Questions locum vets ask

Whose problem is IR35 — mine or the practice's?

It depends entirely on the size of the practice, not on anything about you. Where the client is small, Chapter 8 of ITEPA 2003 applies and your own company decides your status and carries the tax risk. Where the client is medium or large, Chapter 10 applies: the client must determine status, issue you a Status Determination Statement, and the fee-payer operates PAYE on the fee. Since 76% of veterinary businesses have only one first opinion practice, most independents are small clients — but all six corporate groups are medium or large.

Can I really be in two IR35 regimes in the same tax year?

Yes, and for a locum working across the market it is the normal position rather than an edge case. A week at an independent single-site practice is almost certainly a small client, so your own company makes the status decision. A week at a practice owned by one of the six large groups is a medium or large client, so that group issues a Status Determination Statement and its fee-payer runs PAYE before you see the money. Same tax year, same work, two completely different mechanics — and two different sets of records to keep.

Am I caught by Making Tax Digital for Income Tax?

If you are a sole trader with qualifying income over £50,000, you were in from 6 April 2026, tested on your 2024/25 return. The threshold falls to £30,000 from 6 April 2027 and £20,000 from 6 April 2028. The trap is what qualifying income means: it is gross income from self-employment and property before any allowances or expenses, so it is your turnover rather than your profit. A locum invoicing £62,000 and taking home far less is still over the threshold. A locum working through a limited company is outside the regime entirely.

Does my limited company get the Employment Allowance?

Generally not, and this catches a lot of newly incorporated locums. The rule is explicit: if your company has only one director, that director must not be the only employee liable for secondary Class 1 National Insurance. A single-director, single-employee company is therefore outside it, whatever the £10,500 headline suggests. The allowance is also unavailable for workers within the off-payroll working rules. The £100,000 secondary Class 1 liability cap was removed from April 2025, which helps large employers rather than one-person companies.

Is the host practice's insurance enough for me?

Not necessarily, and the RCVS says so specifically about locum work. The Code requires a veterinary surgeon to ensure that all their professional activities are covered by professional indemnity insurance or equivalent arrangements. The RCVS's guidance warns that locums should have particular regard to this, because although the practice's insurance is likely to provide cover for negligence claims, it may not provide any other type of cover — representation in an RCVS concerns investigation, for instance, which is not required but can be insured separately.

What does RCVS registration cost, and when is it due?

The annual renewal for a UK-practising veterinary surgeon is £431 for 2026–27, due on or before 30 April 2026. Pay between 1 and 31 May and it becomes £468, a £37 late fee. If it is still unpaid on 31 May you are removed from the Register, which for a locum means you cannot work. The non-UK-practising rate is £214 and the non-practising rate £71. Section 343(2) of ITEPA 2003 makes a fee for entry or retention in the register of veterinary surgeons deductible from employment income.

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