You agreed a day rate, the practice paid it in full, and now you're staring at a Self Assessment return wondering how much of it was ever really yours.
Locum dentist tax trips people up for one simple reason. Nobody deducts anything at source. The whole day rate lands in your account, and it's on you to carve out tax, National Insurance and your own pension before you spend it.
This guide is for self-employed locum dentists working across practices on a sessional or daily basis. We'll cover how your self-employed status is judged now, what a day rate actually has to cover, the Class 2 and Class 4 National Insurance you'll pay, and a clear rule of thumb for what to set aside. Figures are stated for the tax year shown.
Are locum dentists self-employed?
Most locum dentists are self-employed, but it isn't automatic. Your status now rests on the ordinary employment-status tests HMRC applies to any worker, judged on how you actually work rather than what the contract is titled.
For years, dental associates relied on a special HMRC concession (set out in the old guidance at ESM4030) that broadly treated work under a BDA-style standard agreement as self-employment. That concession was withdrawn with effect from 6 April 2023. HMRC now directs you to the general status guidance at ESM0500 and the Check Employment Status for Tax (CEST) tool instead.
In practice, that means the same factors that decide status for a contractor decide it for you:
- Control - who decides what work you do, and where, when and how you do it.
- Personal service and substitution - whether you must turn up personally, or could genuinely send another suitably qualified dentist in your place.
- Mutuality of obligation - whether the practice must offer you work and you must accept it.
- Financial risk - whether you provide your own equipment, carry indemnity, and can profit from running your work well or lose out if it goes wrong.
- Being in business on your own account - working for several practices, marketing yourself, and running things as a business.
A genuine locum scores well on most of these. You move between practices, set your own availability, carry your own indemnity, and aren't part and parcel of any one organisation. That's a strong self-employed profile. But if you sit five days a week at one practice on fixed hours under close direction, the picture starts to look like employment, and HMRC can challenge it.
This is the same status question associate dentists wrestle with. If you also pick up associate work, our guide for associate dentists walks through the status tests in more depth, and locum doctors face an almost identical framework on the locum doctors page.
What does a locum day rate really have to cover?
Here's the mindset shift. An employed dentist's salary is what they keep. A locum's day rate is turnover, not take-home.
Out of every day rate, you're funding things an employer would otherwise carry for you:
- Income Tax and National Insurance.
- Your own pension (there's no employer contribution behind you).
- Professional indemnity cover.
- Your GDC annual retention fee and any defence-organisation subscription.
- Continuing professional development, courses and equipment.
- Periods with no work booked, plus holidays and sick days.
So a 450 pounds day rate is not 450 pounds of income in any meaningful sense. A useful habit is to think of your day rate in two halves: the part that becomes profit you can live on, and the part that's already promised to HMRC and your future self.
What tax and National Insurance do locum dentists pay?
As a self-employed locum you pay Income Tax and Class 4 National Insurance on your profit (your income after allowable business expenses), all through Self Assessment.
Income Tax. For 2025/26 the personal allowance is £12,570, the basic rate of 20% applies to the next £37,700 of taxable income, and the 40% higher rate runs from total income of £50,271 up to £125,140. The personal allowance is tapered away by £1 for every £2 of income over £100,000, reaching nil at £125,140. The personal allowance remains £12,570 for 2026/27.
National Insurance. Self-employed locums pay Class 4 NIC, and Class 2 works differently from how it used to. The headline rates and thresholds for 2026/27 are confirmed by HMRC:
| Contribution | 2025/26 | 2026/27 |
|---|---|---|
| Class 4 main rate (profits between the lower and upper limit) | 6% | 6% |
| Class 4 additional rate (profits above the upper limit) | 2% | 2% |
| Class 4 Lower Profits Limit | £12,570 | £12,570 |
| Class 4 Upper Profits Limit | £50,270 | £50,270 |
| Class 2 (flat weekly charge) | Not payable; treated as paid where profits are at or above the Small Profits Threshold | Same treatment |
| Small Profits Threshold | £6,845 | £7,105 |
| Class 2 voluntary rate (profits below the Small Profits Threshold) | £3.50/wk | £3.65/wk |
The key Class 2 point: since 6 April 2024 you don't pay Class 2 as a flat weekly charge. If your profits are at or above the Small Profits Threshold, you're treated as having paid it, so your National Insurance record keeps building for the state pension at no cost. If your profits fall below that threshold and you want to protect your record, you can pay Class 2 voluntarily at the rate shown above. Class 4 is the contribution most working locums will actually pay.
You can sense-check your own numbers with our self-employed tax calculator before you file.
How much should a locum dentist set aside?
There's no single percentage that fits everyone, because your tax depends on your total profit for the year. But a practical, slightly cautious rule works well day to day.
A sensible starting point for a locum whose profits sit in the basic-rate band is to set aside around 30% of your day rate for Income Tax and Class 4 NIC combined. The logic: 20% Income Tax plus 6% Class 4 is 26% on the slice of profit above your allowances, and rounding up to 30% gives you a buffer for the part of your income that loses the personal-allowance protection and for your payments on account.
If your profits push you into the higher-rate band (total income over £50,270 for 2025/26), the marginal cost rises to 40% Income Tax plus 2% Class 4, so set aside closer to 40% on the income above that threshold.
Two refinements that keep you out of trouble:
- Open a separate tax savings account and sweep the set-aside in every time you're paid. Money you can't see is money you won't spend.
- Budget for payments on account. In your first full year, HMRC asks for your tax bill plus a payment on account of 50% towards next year on 31 January, and another 50% on 31 July. That first January can feel like 150% of a normal year's tax. Setting aside from day one softens the blow.
Worked example: a locum on 450 pounds a day
Illustrative example. Maya is a self-employed locum dentist in England. She works an average of 4 days a week at £450 a day and takes 6 weeks off across the year for holidays, courses and quiet spells, so she bills for 46 weeks.
Step 1 - turnover. 4 days x £450 x 46 weeks = £82,800.
Step 2 - business expenses. Maya's allowable costs for the year come to £12,800: indemnity cover, her GDC retention fee, a defence-organisation subscription, CPD courses, loupes, professional subscriptions, accountancy fees and business mileage between practices. (Mileage in her own car is claimed at HMRC's approved rate of 45p per mile for the first 10,000 business miles, then 25p; there is no 55p rate.)
Step 3 - profit. £82,800 - £12,800 = £70,000 profit.
Step 4 - Income Tax (2025/26).
- Personal allowance: £12,570 at 0% = £0.
- Basic rate: £37,700 at 20% = £7,540.
- Higher rate: the remaining £19,730 (£70,000 - £12,570 - £37,700) at 40% = £7,892.
- Income Tax total: £15,432.
Step 5 - Class 4 NIC (2025/26).
- 6% on profit from £12,570 to £50,270 = 6% x £37,700 = £2,262.
- 2% on profit above £50,270 = 2% x £19,730 = £394.60.
- Class 4 total: £2,656.60.
Step 6 - the bill. £15,432 + £2,656.60 = £18,088.60 for the year. That's about 26% of her £70,000 profit, or roughly 22% of her £82,800 turnover.
Notice how the set-aside rule holds up. If Maya had banked 30% of every day rate from the start, she'd have put away around £24,840, comfortably covering the £18,088.60 bill and giving her a head start on her first payment on account. Maya should also remember to budget for her own pension out of what's left, because no employer is doing it for her.
Want this checked against your real figures? Our Self Assessment service handles the return, the payments on account and the planning around them.
What about VAT, pensions and your GDC fee?
VAT. Clinical dental work is normally VAT-exempt. Under VAT Notice 701/57, services are exempt where they're within the profession you're registered for and the primary purpose is protecting, maintaining or restoring the patient's health, supplied by a GDC-registered professional. Purely cosmetic work can be standard-rated and is judged case by case. Because exempt income doesn't count towards the VAT registration threshold of £90,000, most clinical locums never need to register for VAT, though it's worth a conversation if you do meaningful cosmetic or other standard-rated work.
NHS pension. If you work as a self-employed locum performing NHS dental services, you may be able to pension that work through the NHS Pension Scheme, subject to the scheme's rules. One trap matters: if you invoice through your own limited company, you cannot pension the work. The NHS Pension Scheme does not recognise a limited company as eligible, so incorporating to bill your locum income takes you out of the scheme. If the NHS pension matters to you, take advice before you incorporate.
Your GDC fee and other costs. The General Dental Council annual retention fee for dentists is £698 for 2026, with the renewal deadline of 31 December 2025 for that fee year. Your GDC fee, indemnity, defence-organisation subscription, CPD and equipment are all normal costs of being a locum and are generally deductible against your profit, which is exactly why your day rate has to cover them.
Your locum tax deadline calendar
These Self Assessment dates apply to a self-employed locum's 2025/26 tax year (the year ended 5 April 2026).
| Date | What's due |
|---|---|
| 5 October 2026 | Register for Self Assessment if 2025/26 is your first year as a locum and you haven't registered before |
| 31 October 2026 | Deadline if you file a paper tax return |
| 31 December 2025 | Pay your GDC annual retention fee for 2026 |
| 31 January 2027 | File your 2025/26 online return; pay the balancing payment and your first 2026/27 payment on account |
| 31 July 2027 | Second payment on account for 2026/27 |
Frequently asked questions
Are locum dentists employed or self-employed?
Most locum dentists are self-employed, but it's decided by how you actually work, not by your job title. Since the old dental associate concession was withdrawn from 6 April 2023, your status rests on the ordinary tests HMRC applies to everyone: control, personal service and substitution, mutuality of obligation, financial risk, and whether you're in business on your own account. A locum who moves between practices, sets their own availability and carries their own indemnity has a strong self-employed profile.
How much tax does a locum dentist pay?
You pay Income Tax and Class 4 National Insurance on your profit through Self Assessment. For 2025/26 the first £12,570 is tax-free, the next £37,700 is taxed at 20%, and income above £50,270 is taxed at 40%. Class 4 NIC is 6% on profit between £12,570 and £50,270 and 2% above that. A locum with £70,000 of profit would pay roughly £18,000 in total, around 26% of profit.
How much should I set aside for tax as a locum dentist?
As a guide, set aside around 30% of your day rate if your profits sit in the basic-rate band, rising towards 40% on any income above the £50,270 higher-rate threshold for 2025/26. Sweep it into a separate savings account each time you're paid, and budget extra for payments on account, because your first 31 January bill includes a payment towards the following year.
Do locum dentists need to pay Class 2 National Insurance?
Since 6 April 2024 Class 2 is no longer charged as a flat weekly amount. If your profits are at or above the Small Profits Threshold (£6,845 for 2025/26, £7,105 for 2026/27), you're treated as having paid Class 2, so your National Insurance record still builds for the state pension. If your profits are below that and you want to protect your record, you can pay it voluntarily at £3.50 a week for 2025/26 or £3.65 a week for 2026/27.
Should a locum dentist work through a limited company?
It can be tax-efficient for some, but there's a specific catch for dentists: if you invoice NHS work through a limited company, you cannot pension that work in the NHS Pension Scheme, because the scheme doesn't recognise a limited company as eligible. If the NHS pension is valuable to you, weigh that up before incorporating, and take advice on the trade-offs.
Do locum dentists charge VAT?
Usually not. Clinical dental work whose primary purpose is protecting or restoring a patient's health, supplied by a GDC-registered professional, is VAT-exempt under VAT Notice 701/57. Exempt income doesn't count towards the £90,000 VAT registration threshold. Purely cosmetic work can be standard-rated and is judged case by case, so it's worth checking if you do a lot of it.
Book a free Tax Health Check →
Talk to a dental accountant
Locum life gives you freedom, but it puts the whole tax, NIC and pension job on your desk. Zmartly works with dentists every day, so we can set up your day-rate set-aside, file your Self Assessment, and keep your NHS pension and limited-company decisions joined up.
Book a free call with a Zmartly accountant and we'll show you exactly what to set aside from your next day rate.
