Locum doctors and travel nurses: what crossing the Atlantic does to your tax

Figures relate to tax year 2025-26 (UK) · 2025 (US)

A thirteen-week contract in Boston. Then a fortnight at home, then six weeks covering a rota in Leeds. Locum doctors and travel nurses build a year out of short assignments, and the tax position changes with almost every one of them.

The agency handles the rota and the accommodation. It rarely handles the tax. So this guide covers residence, stipends, off-payroll rules and social security, in the order they usually bite.

Key takeaways

• Residence decides the framework, and short contracts rarely change it as quickly as people assume.
• American tax-free stipends depend on keeping a genuine tax home somewhere else.
• An assignment expected to last more than a year stops being temporary, and the stipends become taxable pay.
• US states ignore the treaty, so a treaty exemption at federal level can still leave a state bill.
• One certificate of coverage keeps you in a single social security system instead of two.
• Agency, umbrella and limited company routes produce very different outcomes in Britain.
• Locum doctors and travel nurses run two tax years that never line up, so both deadlines need diarising.

What is a locum or travel assignment for tax purposes?

It is a short engagement away from your normal base, usually arranged through an agency. Nothing in tax law uses the words locum or travel nurse. Instead the rules look at where you live, where you do the work, who pays you, and how long the posting should last.

That last point does more work than any other. A posting expected to last under a year is temporary, which opens the door to reimbursed travel and accommodation. Once the expectation passes a year, the same posting becomes your new normal workplace.

Where do locum doctors actually pay tax?

Usually in the country where you do the work, and often in your home country as well. Britain taxes residents on worldwide income. America taxes its citizens wherever they live, and it taxes non-residents on income earned inside its borders. So two claims on one payslip is the normal starting point, not an error.

Relief comes afterwards. The treaty and the foreign tax credit stop both countries taxing the same income twice over, though the arithmetic is rarely tidy. Our guide to the statutory residence test sets out how Britain actually decides residence.

There is a further trap for British clinicians going the other way. According to the treaty, employment income can escape US federal tax where the stay is short, the employer is not American, and no American branch bears the cost. Yet most people fail one of those three conditions without realising it.

Why tax-free stipends are not automatically tax free

American agencies often split pay into a taxable hourly rate and untaxed stipends for housing and meals. That split only works if you have a tax home to be away from. Per IRS guidance on travel expenses, a tax home is your main place of business, not simply the address on your passport.

Keeping one usually means keeping real costs at home. Rent or a mortgage you continue to pay, and a base you genuinely return to, are the evidence that matters. Locum doctors who give up the flat in Bristol and live permanently on assignment have no tax home left to duplicate.

Then there is the one-year rule. If you expect the assignment to run beyond twelve months, it counts as indefinite from the outset, and the stipends become ordinary taxable wages. Extending a thirteen-week contract repeatedly can quietly cross that line.

How the money is taxed on each side

The mechanics differ more than the headline rates. Britain collects through PAYE or Self Assessment, while America collects through withholding plus a federal return and, usually, a state one. The table below sets out where each element lands.

The row that surprises people most covers unreimbursed expenses. An employed nurse in America cannot deduct the cost of getting to an assignment. That is precisely why the stipend structure exists, and why its conditions matter so much.

Agency, umbrella or limited company for locum doctors?

In Britain the route you take changes the whole calculation. Agency PAYE is simplest. An umbrella company also runs PAYE, but the rate quoted usually includes costs that come out before you see anything.

A personal service company was once the default for locum doctors. Off-payroll rules changed that. Where the end client is a public authority such as an NHS trust, the client decides your status, and a determination inside the rules means PAYE regardless of the company.

So the same day rate produces different take-home pay for locum doctors depending on the wrapper around it. Compare net figures rather than headline rates, and ask for the status determination in writing before the first shift.

What happens with National Insurance and Social Security?

One system should cover you, not both. The totalisation agreement between the two countries decides which, based on where you normally work and who sends you. A certificate of coverage is the document that proves it and stops the second country charging as well.

Self-employed locums need to watch this closely. Without a certificate, an American self-employment charge can sit on top of British National Insurance on the same earnings. Our guide to voluntary National Insurance covers why those contribution records still matter years later.

What does a day rate actually leave you with?

Less than the headline suggests, and by different amounts on each route. A £600 day rate through agency PAYE, the same rate through an umbrella company, and the same rate inside the off-payroll rules can leave three different figures in your account. Compare net pay rather than gross, every time.

American assignments behave the same way. A $60 hourly rate with $1,200 a week in stipends is not the same offer as $75 an hour with nothing on top, even where the weekly gross looks close. The first depends on conditions you have to keep meeting all year.

So ask for the full breakdown before signing anything. In our practice, locum doctors who compare gross figures across two countries almost always compare the wrong numbers.

A worked example

The figures here are illustrative. Take an example: a nurse based in Cardiff takes three American assignments in 2025, each of thirteen weeks, with a gap at home between each one.

She keeps her rented flat in Cardiff throughout, pays rent on it every month, and returns there between contracts. Her tax home stays in Wales, so the housing stipends stand up. Her taxable hourly pay is subject to federal and state withholding, and she files an American return for the year.

Britain taxes the same earnings because she remains resident, then gives credit for the American tax paid. The credit covers most of it. What remains is a small balancing payment and a much larger filing exercise than she expected.

Do US states follow the treaty?

Mostly not, and this catches people repeatedly. A state such as California applies its own rules and is not bound by the federal treaty position. So a clinician exempt from federal tax under the treaty can still face a state return and a state bill on the same income.

Assignment states also differ sharply. Some have no income tax at all, while others tax from the first day worked there. In our practice, the state position is the single most common thing missing from an agency briefing pack.

How to set the position up before you start

Most of the fixable problems are fixable only in advance. Once the first payslip is wrong, correcting it takes longer than setting it up would have taken. The order below is the one we use with clinicians.

1. Establish where you are resident for the whole tax year, not just the contract period.
2. Confirm whether the assignment is expected to run under or over twelve months.
3. Keep evidence of a continuing home base, including rent or mortgage payments.
4. Apply for a certificate of coverage before the first day of work abroad.
5. Ask the agency for the status determination and the stipend breakdown in writing.
6. Check which state the work sits in and whether it taxes non-residents from day one.
7. Diarise both filing seasons, because the two tax years do not line up.

Mistakes and penalties we see with clinical contracts

• Accepting stipends without a genuine home base, which makes the whole amount taxable pay.
• Letting a temporary posting drift past twelve months without revisiting the treatment.
• Assuming a federal treaty exemption also covers the state where the hospital sits.
• Working through a personal service company after a status determination says otherwise.
• Starting work abroad before the certificate of coverage is in place.
• Missing the American filing deadline entirely because the British one felt like the only one.

Penalties follow quickly in both systems. HMRC charges for a late Self Assessment return even where no tax is due, and American penalties run on the unpaid balance from the original due date. Neither authority treats a busy rota as a reasonable excuse.

What about pensions and professional fees?

Both travel badly. Britain relieves NHS pension contributions, but an American return may need separate treatment, and treaty protection is not automatic. Professional registration fees are allowable in Britain for approved bodies, yet an employed nurse in America gets no deduction for the same payment.

Keep the paperwork anyway. Contribution statements and fee receipts are cheap to store and expensive to recreate, particularly when a later year turns on what happened during a short contract three years ago.

What records should locum doctors keep?

More than the payslips. Keep contract dates, the shifts you actually worked, travel and accommodation receipts, the stipend breakdown and any status determination. Agencies change, and the paperwork rarely follows you between them. Rebuilding a year of short contracts from memory is where most of the cost of a late filing appears.

Store the detail by date rather than by annual summary. A folder that runs April to April will not answer an American question about a calendar year, and a folder that runs January to December will not answer a British one.

How US UK Tax Accountants helps

Locum doctors and travel nurses get most from us before signing, because the position is still cheap to fix at that stage. From there we handle both returns, the certificate of coverage and the state filings as one piece of work. If you have an assignment coming up, get in touch with the dates and the agency paperwork, and we will map it against your UK Self Assessment.

Last reviewed 19 September 2026. This article is general information and not personal tax advice. Clinical contracts vary enormously between agencies, so check your own paperwork before relying on any of it.