Your first year as a locum goes well. The shifts are steady, the rates are better than you were paid as an employee, and you put some money aside for tax. Then January comes, and HMRC wants last year's tax and half as much again.
It isn't a mistake, and it isn't a penalty. It's payments on account, and it catches out almost everyone who becomes self-employed.
How Self Assessment works
The tax year runs from 6 April to 5 April. As a sole trader, you tell HMRC what you earned in a Self Assessment return, and the online deadline is 31 January after the tax year ends. That's also when the tax is due.
So for the 2025/26 tax year, which ended on 5 April 2026, you file and pay by 31 January 2027. If you were employed before, your tax used to come out of every payslip. Now it's paid months after you've earned the money, which is pleasant until the bill arrives.
What payments on account are
Once you're paying a decent amount through Self Assessment, HMRC asks you to pay towards next year's bill in advance. These are payments on account, and they apply if your last bill was £1,000 or more, unless 80% or more of your tax was already taken at source, through PAYE for example.
- Each payment is half of your last bill, including Class 4 National Insurance.
- They're due on 31 January and 31 July.
- Any difference is settled the next January, with a balancing payment if you owe more, or a refund or credit if you've paid too much.
A worked example
Say 2025/26 was your first full year of locuming, and your bill for it comes to £6,000.
- 31 January 2027: you pay the £6,000 for 2025/26, plus a first payment on account of £3,000 towards 2026/27. That's £9,000 in one go.
- 31 July 2027: you pay a second payment on account of £3,000.
- 31 January 2028: if your 2026/27 bill turns out to be £7,000, you pay the £1,000 still owing, plus £3,500 on account towards 2027/28.
The first January is the big one, because you're paying for two years at once. After that, it settles into a rhythm, as long as you've been setting money aside all along.
Can you pay less?
If you know your income is going to drop, perhaps because you're taking parental leave or cutting down your shifts, you can ask HMRC to reduce your payments on account. Be careful, though: if you reduce them too far and end up owing more, HMRC charges interest on the shortfall.
Setting the right amount aside
Most locums use a rule of thumb, putting aside a quarter or a third of everything they're paid. It's better than nothing, but the right figure depends on how much you'll earn across the whole year. Income Tax and Class 4 National Insurance both come in bands, so the share of each shift that goes in tax rises as the year goes on.
What you really need is the bill itself, worked out as you go: everything you've earned so far, everything you've already booked, less your expenses and allowances. That's a lot of arithmetic to redo every time you take a shift, which is why so few people do it.
For a quick answer now, the locum tax calculator takes your rate and hours and shows the share to set aside, along with what your first January bill looks like with payments on account.
A spreadsheet can do the sums if you keep it up to date. The difference is that Locumoid already knows about every shift, because that's where you booked it, so the estimate is current the moment your diary is.
This article is general information about UK tax as of October 2026, not tax advice. Locumoid's estimate is designed for sole traders, and can't see your other income or circumstances, so check your figures with HMRC or a qualified accountant.