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As is true in a number of sectors, the availability of short-term work for medically qualified individuals has been on the increase in recent years. In 2014, the NHS spent around £2.6 billion on agency workers in England alone, on staff of all levels from A and E specialists to bank and agency staff throughout the health service. This means that more and more doctors are making the move from their permanent positions to locum work to take advantage of the lucrative market and the other benefits that come with being a locum.
For many, the opportunity to become a locum rather than a permanent employee provides an opportunity to enjoy more flexibility in your work life and to find a balance between that and your home life that is often lacking. For some, the pressure of being on the front line all the time can take a huge toll on their emotional wellbeing, so having the chance to take time out or even use their qualifications to do something other than their main role is one which offers some much-needed stress relief.
One of the main benefits of being a short-term employee is the opportunity to have full control over your career path and working as a locum can also enable you to broaden your skill set by undertaking work that might not be available to you in your regular role. Speaking at special events, using your knowledge to provide consultative services or writing for respected publications can all make great additions to both your income stream and your CV. As a locum, you can also avoid a lot of the bureaucracy associated with working in a permanent position – although you will have to take care of your own personal admin, you will not be subject to some of the more onerous aspects of working as an employee.
One of the first things you will need to do to become a locum is to make a decision about how you wish to work. For most people, setting up a limited company is the most tax efficient way to work but others prefer to work through an umbrella company as it reduces the amount of administration and paperwork you need to do to keep your business running smoothly.
If you do decide to work through an umbrella company, it is important to understand the costs involved as you will be paying tax through the PAYE system and national insurance contributions at source, as well as paying a fee to the umbrella company. You will effectively be an employee of the umbrella company, who will be responsible for obtaining your pay from the end client and making the necessary deductions on your behalf. Using an umbrella company may be the more convenient option, but it will reduce your take-home pay significantly as it is not a particularly tax efficient way of working.
For anyone who chooses to work through a limited company, the process of setting one up is relatively simple and can be completed within a couple of hours if you have all the necessary information to hand. Once the process is complete, you will be the director of the company, which means that you will have an additional 10 to 15 minutes of limited company admin per month to keep your records up to date.
If you incur costs during the course of your work, you will be able to claim these back as expenses when it comes to filing your tax return. You will need to keep records of your outgoings on any items that you use wholly and exclusively in the course of your work in order to claim tax relief on them. Your expenses could include a range of items including work-related travel, purchase and maintenance of any equipment that you use, accountancy fees, the costs of running a home office, training costs, any uniform you may need for your work and other items that you use in the course of conducting your work.
In order to claim tax relief on your expenses, you will need to keep records of how much you have spent and include the details on your tax return. You won’t usually be required to actually present your receipts or invoices, but it is worth keeping hold of them in case HMRC ask for any further information or clarification of your outgoings.
There has been an increase in demand for contractors to return to work in the medical profession in response to the COVID-19 crisis, in which the NHS reached out to retired doctors and nurses. In light of these events, new guidance (Spotlight 54) was published to urge workers returning to the field to be wary of payment providers. If you’re considering working under an umbrella company during your return service to the NHS, you should be aware of these schemes and how they operate.
HMRC’s warning of ‘tax avoidance promoters targeting returning NHS workers’ describes that, although the schemes work in different ways, they all follow similar principles:
The common feature is how these schemes try to disguise your level of earnings, which would normally be subject to tax and National Insurance contributions and some make claims of take home pay as high as 80-85%.
If you’re thinking about working under an umbrella company for the duration of your employment, you should be wary of any company who promises increased take home pay or reduced tax liabilities. Instead, you should look for a company with a long-standing industry reputation and recognition and accreditation.
Our sister company, Parasol, have been supporting umbrella employees since 2000 and in that time have helped thousands of employees on their contracting journey. Their FCSA accreditation means they’re committed to the highest standards of compliance, so you’ll always be in safe hands.
For most locums, finding work is their main concern when they first become self employed as they want to ensure that they will have a steady income coming in. One of the quickest ways to find work is to register with a specialist agency such as MedicsPro or Medic International which will be able to match your skills and experience to their clients’ needs. Many agencies offer opportunities across a range of different disciplines enabling you to utilise your skills in your preferred manner, expand on your existing experience and help you to take your career in the direction that you want.
For many, having your own website can be a good way to show potential clients and employers your experience, and it works as an online CV if you want somewhere to direct interested parties. You can also use social networking sites such as LinkedIn to create a network of contacts which can be incredibly useful if you meet a lot of people in your professional life and want to keep in touch with them, especially if you have a good working relationship and might want to work together in the future.
As a locum, you can earn significantly more than you will take home as a regular employee, and although you will need to set aside from for tax, you can expect to earn more than you would in a permanent role. The average rates of pay for different specialisms can vary, but some examples are below:
The higher rates of pay that a locum doctor can attract is one of the main factors that appeals to most medical professionals who consider leaving permanent employment to work for themselves, but it is important to remember that the ‘headline’ figures do not take into account the tax and National Insurance contributions that you will need to pay as a self employed individual. These rates also serve as compensation for the lack of benefits such as sick pay, holiday pay and the fact that you might need to account for periods of no income at all in between contracts.
However, for most locums, this is more than balanced out by the rates they earn when they are working, not to mention the flexibility and control that they have over their careers. Whilst medicine is traditionally seen as a career which can require a huge time commitment, unforgiving scheduling and shift-work which isn’t conducive to an optimal work-life balance, working as a locum can offer the chance to enjoy longer holidays, time off when you need it and hours which suit you and your schedule.
As a locum, there are plenty of ways to turn your career into a rewarding and enjoyable one, whether that’s through travelling with work, making new contacts or just exploring opportunities in areas which you may not otherwise have had an opportunity to experience.
Should you choose, you can take local, short-term projects which will allow you to spend more time at home, but for those who are keen to broaden their horizons, you can pursue opportunities all over the world and get the chance to travel whilst enhancing your CV at the same time. Being a locum can also be an ideal way for students to earn some additional money while they study for additional qualifications, or freeing up a little time for them to study for exams and assignments.
For those at the other end of their careers, working as a locum can be a good way to ease yourself into semi-retirement. Giving up work altogether can seem like an unappealing option financially, whereas taking on some short-term contracts can allow you to wind down your hours slightly whilst still enjoying a reasonable income. For many, being able to use their experience in a role where their seniority is valued can be a rewarding way to ensure that your training is put to good use, whilst keeping your skills up to date.
Whatever your motivation for considering becoming a locum, it is always best to take expert advice on the best way to manage the move. From registering your own limited company to understanding the options available to you when it comes to VAT, having a specialist accountant on hand can help you ensure that you make financially sound decisions about your career. At Nixon Williams, our accountants are experienced in the way contractors work, so we can help you with everything from the moment you make the decision to planning your retirement.
Nixon Williams are specialists in helping contractors to make a success of their careers and have been working with independent professionals for over twenty years. Our fixed-fee packages mean that you never need to worry about an unexpected bill, and you have access to our expertise whenever you need it.
You will have a dedicated accountant who will be familiar with your circumstances and will offer you advice which is designed to help you achieve your goals whilst saving time and money. We have a dedicated accounting portal, Vantage, which will give you access to a range of useful tools and our accountants will take care of all your accounting needs, from dealing with HMRC and advising you on your expenses to completing your tax return, VAT return and ongoing tax advice all year round. Whatever you need to know about your money, we have the answers.
For advice and information to help you manage your finances and save money, give our friendly team a call today on 01253 362062.