Locum pharmacists
Many locums work for several pharmacies in a month, from small independents in Fulham to large chains across London and the Home Counties. Most are self employed sole traders, invoicing for each shift and paying tax through self assessment. Others work through their own limited company.
Locum costs that are often allowable include your General Pharmaceutical Council registration fee, professional indemnity insurance, membership of professional bodies, training needed to keep your skills current, and travel to the different pharmacies you work in. Travel to a regular workplace you attend most days is treated differently, so the pattern of your bookings matters.
- Invoicing and records for each shift
- Mileage and travel between pharmacies
- Self assessment and payments on account
- Making Tax Digital once turnover passes the threshold
Limited company locums and IR35
Working through a limited company can be more tax efficient for some locums, because the company pays corporation tax and you take money out as salary and dividends. It also brings company accounts, a confirmation statement and stricter rules on how money is used.
IR35, the rules that decide whether a contractor is taxed like an employee, matters here. When you work for a medium or large pharmacy group, the group usually decides your status. If it says you fall inside IR35, tax and National Insurance are taken from your fee and much of the benefit of a company disappears. We look at your mix of bookings and tell you honestly whether a company is worth it.
What is included
- Self assessment returns for locum pharmacists
- Limited company accounts and corporation tax
- IR35 reviews for locum bookings
- Pharmacy accounts with NHS income reconciliation
- VAT returns and partial exemption calculations
- Stock valuation and management accounts
- Payroll for pharmacy staff
- Due diligence on pharmacy purchases
Pharmacy owners and NHS contract income
An independent community pharmacy has several streams of income. In England, NHS payments come through the NHS Business Services Authority each month. They cover fees for dispensing, reimbursement of the cost of the medicines supplied, and payments for services such as Pharmacy First, flu vaccinations and the New Medicine Service. On top of that are private services and over the counter retail sales.
NHS payments are made partly as an advance, with the balance following once the prescriptions have been processed. That means income in your bank account does not line up neatly with dispensing in the month. We match the schedules to your records so your accounts show what was earned in each period, and so you can see how much profit comes from dispensing compared with services and retail.
VAT in a pharmacy
Pharmacies deal with more than one VAT treatment under one roof. Medicines dispensed by a registered pharmacist on prescription are generally zero rated. Many over the counter products are standard rated. Some health services provided by registered health professionals are exempt.
Because some income is exempt, a pharmacy may not be able to reclaim all the VAT on its costs. This is called partial exemption, and the calculation needs to be done properly each year. We set up your till and accounting categories so each sale lands in the right VAT box, prepare your returns under Making Tax Digital and carry out the partial exemption calculations.
Stock, staff and margins
Drug stock is valuable and prices change, so a reliable year end stock figure is essential. We help you plan counts and value stock properly, including items set aside for patients. We also produce management accounts that show gross margin, staffing costs and service income month by month. That helps you judge which NHS and private services are worth the pharmacist time they take, and spot early if purchase prices are rising faster than reimbursement.
Most pharmacies employ dispensers, technicians and counter staff. We run payroll, handle pension auto enrolment and apply the Employment Allowance where eligible to reduce employer National Insurance.
Buying, selling or opening a pharmacy
Buying a pharmacy usually means paying for goodwill as well as stock and fittings. We review the accounts and NHS income history before you commit, help with finance applications and advise on whether to buy the company or just its assets. When selling, we look at the capital gains tax position and any reliefs that may apply.
We start with a free review and agree a fixed fee before any work begins. Our pharmacy clients live and work across Fulham, Earls Court, Putney and wider London. Many locums we act for are newly qualified and filing a self assessment return for the first time, so we explain each step, from registering with HMRC to setting money aside for the bill due on 31/1.
Who this suits
- Self employed locum pharmacists
- Locums working through a limited company
- Employed pharmacists with extra locum shifts
- Independent community pharmacy owners
- Pharmacists buying or selling a pharmacy
Common questions
What expenses can a locum pharmacist claim?
Common allowable costs include GPhC registration, professional indemnity insurance, professional body membership, relevant training and travel to temporary workplaces. Travel to a pharmacy you work at regularly may not qualify. We review your bookings to get the claim right.
Should a locum pharmacist set up a limited company?
It can save tax if your work falls outside IR35 and you do not need to draw out all your income. If most of your bookings are with large groups that place you inside IR35, the savings are much smaller. We compare both options with your figures.
Who decides IR35 status for locum pharmacists?
When you work for a medium or large organisation, that organisation is responsible for deciding your status. For small independent pharmacies, your own company makes the decision. Different bookings can have different outcomes.
Is pharmacy dispensing zero rated for VAT?
Medicines dispensed by a registered pharmacist on a prescription for an individual are generally zero rated. Many over the counter sales are standard rated, and some healthcare services are exempt, which can affect how much VAT you can reclaim.
How are NHS pharmacy payments recorded in the accounts?
NHS payments arrive as an advance followed by a balancing payment, so bank receipts do not match the month the work was done. We use the payment schedules to record income in the right period.
I am an employed pharmacist doing extra locum shifts. Do I need a tax return?
Yes, if you earn more than £1,000 a year from self employed locum work, you will usually need to register for self assessment. Your salary stays under PAYE and your locum profit is added on your return.
What tax applies when I sell my pharmacy?
Selling a pharmacy business or its shares usually creates a capital gain. Reliefs may reduce the tax if you meet the conditions. We review the deal structure early so you understand the likely tax before you agree terms.