NHS Locum & Bank Rate Calculator

PAYE bank vs umbrella vs Ltd company: what's actually different

If you pick up NHS locum, bank or agency shifts, you'll often be offered the same day rate under different payment structures — and the structure can change what actually lands in your bank account, even though the headline rate looks identical. There are three structures worth understanding.

PAYE via NHS staff bank is the simplest: the trust employs you directly for the shift, deducts Income Tax and National Insurance as normal, and (usually) lets you continue building NHS Pension Scheme membership. There's no third-party fee, so more of your day rate reaches you.

Umbrella company pay is common when you work through an agency rather than directly with a trust. The umbrella employs you, taxes your income in exactly the same way as PAYE — same Income Tax, same National Insurance — but charges its own margin fee for running the payroll, and you're generally not in the NHS Pension Scheme. That margin, not the tax treatment, is the main reason umbrella pay often nets less than the equivalent PAYE bank shift.

Limited company (Ltd/PSC) working is the one place people most often get caught out. Before 2017, contracting through your own company could be more tax-efficient because company profits could be drawn partly as dividends, taxed differently to salary. IR35 reform changed that for the public sector in 2017, and for most other engagers in 2021: it's now the trust or agency, not you, who decides whether your engagement is "inside IR35". For most NHS locum and bank work — where shifts are supervised, rostered and controlled much like employment — the answer is usually inside IR35, meaning your company's income from that engagement is taxed almost identically to PAYE anyway, just with the extra cost and admin of running a company on top. Because of this, we haven't built a calculated Ltd company column into this tool — a precise number would risk implying a tax advantage that, for most NHS locum work today, no longer exists. If you're seriously considering a Ltd company structure, get advice from an accountant who understands IR35 and NHS engagements specifically, rather than relying on a calculator.

PAYE bank vs umbrella vs Ltd/IR35, side by side

The table below summarises the practical differences — not just the headline tax treatment, but who actually carries the fee, whether NHS Pension access survives the arrangement, and which structure each one tends to suit.

Structure	Tax treatment	Who pays the fee	NHS Pension access	Best for
PAYE — NHS staff bank	Taxed as normal employment income: Income Tax + NI via PAYE, same bands as your substantive post	No third-party fee — the trust pays you directly	Yes — normally auto-enrolled unless you actively opt out	Shifts booked directly through your own or another trust's staff bank
Umbrella company	Taxed identically to PAYE — same Income Tax and NI bands, since HMRC treats it as employment income	You — the umbrella's margin comes out of your pay before you receive it, commonly a flat weekly fee	No — not normally enrolled in the NHS Pension Scheme; may be auto-enrolled into a separate workplace pension instead	Agency-booked shifts where the agency requires PAYE-equivalent pay via an umbrella
Ltd company / PSC (inside IR35 — the typical case)	If assessed inside IR35, taxed almost identically to PAYE on deemed salary — no material tax saving in practice	You — accountancy and admin costs of running a company, with no offsetting tax advantage while inside IR35	No — not eligible for NHS Pension Scheme access via a Ltd company engagement	Only appropriate if genuinely assessed outside IR35, which is uncommon for typical rostered NHS shifts — get specialist advice before assuming it applies to you

Read this table as "what changes for the same gross day rate", not as a ranking — the right structure for you depends on how you actually work, not just on which row nets the most on paper. A locum juggling multiple agencies may value an umbrella's continuity of employment over the margin fee it costs; a staff bank regular will usually find PAYE bank hard to beat.

What actually determines whether you're inside or outside IR35

IR35 status isn't a checkbox you tick yourself — for NHS engagements it's determined by the trust or agency (the "fee-payer"/end client) using a set of tests HMRC has used in tribunal cases for years. Four factors do most of the work in that assessment.

1. Control — who decides how, when and where you work

If the ward, department or rota manager decides your shift pattern, supervises your clinical practice, and can reassign you to different duties or areas during a shift, that points strongly towards inside IR35. Genuine outside-IR35 engagements typically involve much more autonomy over how the work gets done — rare for a rostered clinical shift.

2. Substitution — can someone else do your shift instead of you?

A genuine, unfettered contractual right to send a suitably qualified substitute in your place is one of the most heavily weighted tests. Most NHS bank and locum shifts require the specific named individual to attend — because of DBS checks, professional registration and clinical sign-off — which is itself a strong inside-IR35 indicator, regardless of what any contract wording says.

3. Mutuality of obligation — is either side obliged to offer or accept further work?

Ad hoc bank shifts, where the trust isn't obliged to offer you further shifts and you're not obliged to accept them, lean towards outside IR35 on this one factor. On its own, though, this rarely outweighs strong control and substitution indicators — HMRC and tribunals weigh the whole picture, not a single test in isolation.

4. Who actually makes the call, and where you can see it

Since April 2017, NHS trusts have been responsible as the end client for issuing a Status Determination Statement (SDS) for engagements booked through an agency or a worker's own company. If you're working via a Ltd company and haven't seen an SDS, ask your trust or agency for it directly rather than assuming your status — this is the actual paper trail HMRC would look for, not a calculator estimate.

None of these four tests decide anything in isolation, and HMRC's Check Employment Status for Tax (CEST) tool — which many trusts use as part of their assessment — weighs them together rather than in a strict order of priority. If you're being offered a shift through an agency on a Ltd company basis and the paperwork is silent on status, treat that as a prompt to ask questions rather than an invitation to assume the engagement is outside IR35. The practical takeaway for most locums is straightforward even without a full legal assessment: compare PAYE bank against umbrella using the calculator above, since those are the two structures you can actually plan around with confidence, and treat any Ltd company pitch that promises a clear tax saving on typical rostered NHS shifts with real scepticism.