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Salaried, partner or locum?

Following last month's Pulse Finance blockbuster on GP employment, many young GPs have asked us to summarise the financial and tax implications of the three main career paths. Ian Tongue obliges

Following last month's Pulse Finance blockbuster on GP employment, many young GPs have asked us to summarise the financial and tax implications of the three main career paths. Ian Tongue obliges

Deciding which path to take is an extremely important decision and care must be exercised especially when considering the first offer that you come across as this can in some cases be the easy option rather than best one.

Being a GP principal is usually regarded as the ‘Holy Grail' and therefore it is unlikely that a newly qualified GP would be offered a partnership immediately. Therefore, the first question that you will be asking yourself following RCGP admission is likely to be: should I be a salaried GP or a locum?

The treatment for accounting and tax purposes between these options is very different.


A salaried GP position will be very similar to being registrar with the notable exception of hopefully a significant rise in income!

Key points for decision making:

• You will remain an employee of the practice

• Your tax and national insurance will be deducted at source by your employer

• Your employee pension contributions will be deducted at source

• Your employer pension contributions will be paid by the surgery

• There is limited scope for tax relief on expenditure: it is usually restricted to professional subscriptions and indemnity insurance

• You may be able to negotiate other benefits as part of your salary package but care must be exercised to ensure these are not taxable

• Your may be able to do locum or out of hours work but this would require approval from employer

When negotiating a package for a salaried position you should consider the true cost of employing you to the practice and reach an acceptable compromise. For example, paying a salary of £75,000 per annum actually costs the employing practice somewhere in the region of £95,000 when National insurance and pension contributions are considered.

Many GP practices are offering salaried positions as an alternative to offering partnership as earnings under the new GMS contract are generally falling which puts added financial pressure on existing principal GP's. When accepting a salaried position it is important to understand the intentions of the principal GP's in order that you know where you stand in relation to career progression. Frequently, the salaried position is used to groom the next partners and therefore this is an important consideration.


Becoming a locum can result in higher earnings than salaried positions but it does come with increased risk. The locum market is very competitive and in many areas the market is saturated resulting in lower availability of work. Therefore, you may find that your earnings are not consistent from one month to the next.

Becoming a locum changes your tax status from being an employee to being self-employed. This can be very daunting as most GPs have not received any form of training or financial guidance to enable them to run a business.

Key points for decision making:

• You will become self employed

• Your earnings will be uncapped

• You will be paid without deduction of tax

• You must declare your earnings to HM Revenue and Customs annually: this is known as ‘Self-assessment'

• You will require an accountant

• You will need to keep accurate and high quality accounting records

• You can charge expenses incurred for business purposes

• You must save for tax which is paid on 31st Jan and 31st July of each year

• Your earnings are not guaranteed

• You will have no employment rights, sick pay or holiday pay

• Income protection insurance will be very important

• You will be allowed to remain in the NHS pension scheme, but you must pay contributions directly to the PCT via Locum A/B forms (Solo forms for out of hours work). Note that agency work does not qualify for pension contributions.

• Be aware that PCTs pay the employers pension contributions

Being a locum should not be regarded as an easy option and clearly the above list has several negatives. However, the potential earnings can be high, with six figure earnings not uncommon. Often locums establish good relationships with certain surgeries and frequently this can lead to further opportunities.

In today's competitive market, many newly qualified GP's have to take locum positions but few remain locums in the long run.


Becoming a principal GP is likely to maximise your earnings potential and will probably result in entering into partnership with other GP's. Being in partnership is a significant commitment to your fellow partners and should not be entered without due consideration.

Key points for decision making:

• Your earnings will be dependent on practice profitability and may therefore be volatile

• You will be taxed under self-assessment

• You must save for tax either personally or through the practice

• Your monthly income will be known as drawings

• You may have to earn your full earnings over a period of time known as achieving parity

• You may have to invest in the practice surgery premises - i.e. introduce capital into the practice

• You will have to sign a partnership agreement showing commitment to fellow partners and surgery

• You r pension contributions will be dependent on profit share after certain adjustments.


Ultimately, most GP's aim to become a principal as soon as possible, but the changing market often results taking interim positions until the right opportunity presents itself. When considering the viability of your options it is important to understand the financial consequences of the opportunities that will present themselves.

There is no right or wrong career path and embarking in one direction does not exclude you from another. Ultimately, you must make the choice that suits your personal circumstances and career aspirations.

Ian Tongue is a partner at Sandison Easson and Co, specialist medical chartered accountants

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