Accountants for locum Doctors, Vets, Nurses and the medical profession

Advantages of being a Locum and working through your own limited company

Firstly what are the benefits of becoming a locum doctor:

  • Virtually guaranteed work due to the huge demand.
  • Freedom to work when and where you want.
  • Lucrative long or short-term locum opportunities from one-day to one-year.
  • Opportunities to expand your skills and experience.
  • Opportunities to try different places of work.
  • Higher rates of pay.
  • Overseas recruitment programmes.

Working as a locum through your own limited company certainly has its perks too. Basically, if you are a locum working through your own limited company your take home will be anywhere between 75% - 80% of your daily rate, for example:

Daily rate £200 take home between £150 - £160
Daily rate £300 take home between £225 - £240
Daily rate £400 take home between £300 - £320
Daily rate £600 take home between £450 - £480

Any accountant will tell you that working through your own limited company is the most tax efficient way possible. However, you shouldn't get a genuine limited UK company confused with some of the rather unusual and strange tax schemes currently being offered. Realistically if you live in the UK, work in the UK and get paid in the UK you’re going to have to pay tax in the UK. There are a host of alternatives but HM Revenue and Customs are clamping down on tax avoidance schemes so you'd do well to avoid them. Remember you and only you are liable for your taxes despite what anybody else tells you.

Savings made via National Insurance

If you were to work through an umbrella company (like a payroll bureau) you will pay both employees and employers NI (Employers NI is 12.8% of your salary, and employees NI 11% for the first £770 a week, and 1% thereafter (both after tax free personal allowances).

On a typical contract of say £350 per day you will pay around £300 a week in NI through an umbrella company whereas with your own Limited Company you will pay just £30, so the NI savings alone come to about £12,000 a year assuming a 45 week working year.

If you are on £200 per day you'll save £9,000 or if on £600 a day save £20,000.

The downsides

Working through your own limited company and being a locum isn’t for everybody. Being a director of your own limited company does come with responsibility, find below a few things to consider, you'll need to:

• put aside an amount per month for tax bills
• understand what type of taxes to pay and when they will need to be paid
• learn about what expenses you can claim
• you'll need to open a business bank account 
• and may need public liability insurance / professional indemnity insurance?

However, locums and other medical professionals tell us that after the flood of initial questions, the administration side of working through your own limited company only requires 15 – 20 minutes for month, providing that is you work with an experienced accountant. If you haven’t formed a limited company yet, the government has now made this surprisingly simple and it only takes five minutes.

So other than a bit of admin what are the downsides? Well, surprisingly few:

  • The odd old fashioned comment about ‘You won't know; you're only the locum’ or ‘you’re not my doctor’, however these are becoming less frequent due to the sheer volume and proliferation of locums.
  • Having to source your own work can sometimes be difficult. Agencies can help here and there's no shortage of these!
  • Pay envy from co-workers - this is something that has affected locums, consultants and contractors in every industry.

Finding work as a locum

Due to the high demand for locum's it shouldn’t really be an issue sourcing work. But before registering with an agency, you might find the questions below helpful.

  1. What NHS Hospital do you regularly supply locum doctors to?
  2. What are your general guidelines on locum pay rates?
  3. What are your payment procedures?
  4. What compliance practises does your company follow?
  5. Does your agency have any references from clients and locum doctors regarding your services?
  6. Please can you send me your company terms and condition?
  7. Do you offer a “preregistration form”? (This form is an agreement between the doctor and the recruitment agency detailing the doctors exact locum requirements).

We recommend dealing with only one agency (two maximum). Some people feel dealing with only one agency restricts their job options, however this means you will build a strong relationship with them ensuring they are looking for the best possible positions for you.

When do I charge VAT for my services?

Most locum doctors do not need to charge VAT for their services, however this does depend on your contract.

For example, if you are a Locum Doctor working for a hospital directly dealing with patients you would be exempt from VAT, basically you would not have to charge VAT for your services, meaning your income is entirely yours, no deductions made.

However if you are a locum doctor performing a HR/Office/Managerial advisor position, where you are not treating patients directly, you will need to charge standard VAT rate for your service.

Visit the HMRC website for a full breakdown on how VAT is applicable for Locum Doctors: Health Professional.

Only you can decide if being a locum and working through a limited company is right for you. If you have any questions about working through your own limited company or would like any further advice please call our New Business Team on 01442 275789 or e-mail newbusiness@sjdaccountancy.com.

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SJD Accountancy

SJD Accountancy are the UK's largest specialist provider of fixed fee, Limited company accountancy services to contractors; we've been acting for contractors across the UK since 1992 and have more than 15,000 clients.

We are the only national specialist firm of contractor accountants with offices nationwide. SJD Accountancy has more qualified staff than any other firm in our market with qualifications from the following major tax and accountancy bodies - ATT, AAT, CTA, ACCA, CA, ACA and FCCA.

  • Unlimited face to face meetings. This is a unique service only SJD Accountancy offers - unlimited face to face meetings across the UK - tax is complicated and sometimes only a meeting will do.
  • UK's largest contractor accountants with more qualified staff. No call centres, no outsourcing, no automated call handling. Simply telephone, email or meet your own dedicated accountant face to face.
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  • Outstanding reputation. We have won more awards for customer service and accountancy excellence than any other firm in our market, including: Best Accountant for Contractors, Accountant of the Year and Best Professional Service Team to name just a few.
  • All inclusive low cost fixed fee accountancy package which includes completion of accounts*, payroll bureau, dividends and corporation tax computations, personal taxation, free bookkeeping software, your own dedicated accountant* and all company returns for a fixed fee starting from £120 plus VAT per month. Check our packages for more detail.

If you have any questions about contracting or would like any further advice please call our new business team on 01442 275789 or email: newbusiness@sjdaccountancy.com. Our new business team is open Monday to Thursday (8am to 8pm), Friday (8am to 7pm) and Saturday (10am to 4pm)

Appoint SJD Accountancy and never worry about your tax or accountancy affairs again.

Form your own limited company with SJD - our same day online company formation service includes company bank account set up, VAT/PAYE registration and advice on optimum share structure. 

You may also find the following pages, guides and case studies useful:

*If you would like us to complete your company year end accounts we simply ask that you have been a client of SJD for one year or have made 12 monthly payments. All accountants are part or fully qualified.