Locum Pay Calculator UK 2025/26

Locum Rates vs AfC 2025/26

NHS Band Comparison: Substantive vs Locum

The Complete Guide to Locum Work in the NHS and Private Sector 2025/26

Locum vs Substantive NHS Employment: The Real Financial Picture

Locum working in the NHS means working as a temporary or flexible clinician, either directly through NHS trusts, via staffing agencies, or as a self-employed practitioner. The apparent attraction is a higher hourly rate — sometimes substantially higher than the AfC (Agenda for Change) equivalent. However, the true financial comparison is far more complex than the headline rate suggests. When you leave substantive NHS employment for locum work, you sacrifice a package of benefits that can be worth 40–50% of your basic salary in cash-equivalent terms.

The Benefits You Sacrifice as a Locum

The most significant sacrifice is the NHS Pension Scheme. As a 2015 scheme member, you accrue 1/54 of your pensionable pay each year as a guaranteed income for life, index-linked to CPI. The employer contribution rate is 23.7% of your pensionable pay — this is effectively additional remuneration that you receive only as a substantive employee. On a Band 6 salary of £37,338, the employer pension contribution is worth £8,851 per year that you lose as a locum. Beyond the pension, substantive employees receive: a minimum of 27 days annual leave (rising to 33 days with service) — worth approximately 10.5% of salary as leave pay; statutory and occupational sick pay covering up to 6 months full pay and 6 months half pay; paid study leave and a CPD budget typically worth £500–£1,500 per year; enhanced maternity and paternity pay; clinical negligence indemnity through NHS Resolution; and death-in-service benefits. The total value of these benefits typically adds 35–45% to the headline salary, meaning a locum needs to earn 35–45% more gross to break even.

IR35 and NHS Locums: What You Need to Know

IR35 (off-payroll working rules) has a profound impact on NHS locums. Since April 2017 for NHS trusts, and April 2021 for all public sector bodies, the hiring organisation (the NHS trust or GP practice) determines whether a locum contractor is inside or outside IR35. The NHS generally assesses most locum arrangements as "inside IR35" — meaning that even if you operate through a limited company, the agency or NHS trust must deduct PAYE income tax and employee National Insurance from your payments. Working "inside IR35" through a limited company gives you the legal costs and admin burden of a company without the tax benefits. Most NHS locums are therefore better served by working through PAYE channels (direct NHS, agency PAYE, or umbrella company) rather than maintaining a limited company for NHS shifts.

Umbrella Companies vs Limited Company for Locums

For NHS locums operating inside IR35, umbrella companies provide a practical solution. An umbrella company employs you on a PAYE basis, bills the agency, and processes your taxes. You receive a net pay after PAYE income tax, employee NICs, and the umbrella's weekly margin fee (typically £20–£30/week). The umbrella handles payslips, pension enrolment (usually a basic workplace pension, not NHS), and holiday pay accrual. For truly self-employed locums working in the private sector or in GP practices that determine them outside IR35, a limited company with optimal salary-dividend extraction can save £2,000–£8,000 per year in taxes compared to PAYE, though you lose the right to join the NHS Pension Scheme. A SIPP (Self-Invested Personal Pension) or pension through your limited company can partly compensate for the lost NHS pension, but it will lack the defined benefit security of the NHS scheme.

Top Locum Agencies in the UK 2025

The UK locum staffing market is large and varied. For NHS nursing and AHP locums: Lantum and Patchwork Health are NHS-endorsed platforms that offer direct engagement with trusts, often at preferential rates and with access to flexible NHS bank shifts. ID Medical is one of the largest UK healthcare staffing agencies, covering nursing, medical, and AHP. Thornbury Nursing Services specialises in nursing locums at premium rates. For GP locums: Locum's Nest and Remedy Healthcare are widely used. For medical consultants: specialist medical staffing agencies including Maxxima and Athona are key players. When comparing agencies, consider not just the headline hourly rate but also: whether they deduct umbrella fees from your rate, how quickly they pay (some settle weekly, others fortnightly), and whether they offer NHS Pension access for qualifying NHS shifts.

When is Locum Work Worth it Financially?

Locum work makes the strongest financial case in specific circumstances: when you can genuinely earn 40–50% more gross than your substantive AfC equivalent (to compensate for lost benefits); when you already have adequate pension provision through other means (e.g., a spouse's DB pension, property portfolio, or existing pension fund); when your personal circumstances make flexibility more valuable than security (carers, portfolio workers, those building a private practice); and when you are in the higher rate tax band, where a limited company outside IR35 can provide material tax savings. Locum work makes the weakest financial case for newer clinicians (Band 5–6) where the gross premium barely covers lost benefits, for those who value job security and progressive AfC pay increments, and for those approaching retirement where maximising NHS pension final accrual is critical.

Tax Efficiency for Locum Practitioners: SIPP Strategy

For locums who cannot access the NHS Pension, a Self-Invested Personal Pension (SIPP) or group personal pension is the most effective wealth-building alternative. Contributions receive income tax relief at your marginal rate: a higher-rate taxpayer contributing £10,000 gross to a SIPP pays only £6,000 net (receiving £4,000 tax relief). If operating through a limited company, employer pension contributions are fully deductible against corporation tax — every £10,000 contributed by the company costs only £7,500 after 25% CT relief, and the director pays no income tax or NICs on the contribution. Annual Allowance limits pension contributions to £60,000 per year (2025/26). The Lifetime Allowance was abolished from April 2024. For locums with high earnings, maximising pension contributions is often more valuable than any other tax planning strategy, and can bring taxable income back below the higher rate threshold.