Do I pay tax on this work?
As a self-employed locum you will be required to submit an annual Self-Assessment Tax Return (SA100). This will include all your income during the tax year (ending 5th April each year) be it from a salaried role, locum work and any interest, dividends or rental income. Your total income is used to determine the amount of tax and NI for which you are liable in the year. The liability is paid in two ‘payments on account’:
- 1st payment on account by 31st January (within the tax year)
- 2nd payment on account by 31st July (after the tax year)
The Tax Return is due to be submitted by 31st January following the tax year. Any further liability due will be paid to HMRC by 31st January after the tax year, alongside the 1st payment on account for the next tax year.What expenses can be claimed as a self-employed Locum GP?
A variety of expenses can be claimed to help reduce your tax liability. All records and receipts for the expenses claimed must be kept for six years after the tax year has ended. Items for which the full cost can be claimed include:
- professional subscriptions paid
- medical literature or equipment purchased
- refresher/CPD courses attended (including travel to and from the course)
- public transport costs incurred for business purposes
- postage and stationery
- management fees incurred relating to any agency or session booking system.
You may also make a partial claim for certain costs which have a duality of purpose, ie: costs both business and personal usage. Such costs include:
- line rental and tariff costs for a home telephone and broadband a mobile phone contract
- the initial cost of a home computer, laptop, tablet and the phone itself computer software, printer cartridges and
- repairs certain household costs when using one’s own residence as a place of business.
You may also claim for motor expenses, via a mileage claim or as a proportion of running costs. For either claim a mileage log must be maintained as evidence, detailing business miles and total miles. It should be noted that travel between home and the practice could be counted as private, not business mileage, depending on the circumstances. Specialist advice will help to ensure that only the allowable travel is included in a claim.Can I set up a company for this work?
A limited company can be used to conduct locum work, although you should be certain that a company is the right structure for you and obtaining specialist advice is essential to ensure all necessary considerations are made. A limited company would limit your potential liability to the amount you had invested. This is in direct contrast to being self-employed where there is no limit to potential liability. Having a limited company can help lower the tax you would have to pay, depending on the company structure, your household cashflow requirements and pension contributions.
Companies have a larger administrative burden, such as requirements to complete Corporation Tax Returns as well as your own Self-Assessment Tax Returns each year and Companies House compliance.
In addition, by working through a personal company, the IR35 rules (intermediaries’ legislation) may apply. These exist to ensure that people who would be classed as an employee, if not for their limited company, do not benefit from tax advantages available to self-employed individuals. To determine whether your work could be regarded as employed or self-employed, HMRC has released an Employment Status Indicator.
Since April 2017, however, the responsibility of determining if IR35 rules apply lies with the ‘employer’ (engager). There are significant changes for taxation, NI and pensions depending on the outcome of this test, although it does not affect the employment status with regards for statutory rights. Taking specialist advice in this matter before accepting an engagement will help ensure that the correct status is applied to each engagement.Services offered:
General accountancy advice
GP locum sole trader accounts
GP partnership accounts
GP partnership advice
Limited company formations
Locum doctor accounts
Private practice accounts
Tax planning advice