Locums provide a fantastic service to both NHS and private practices. Often the rates for locums are better than long-term employment. Both private and NHS facilities seek to fill areas of need and are willing to pay a premium for this. Yet as a locum, how can you make sure you are getting the best financial package out of your work? Here is a quick guide to help you decide.
Will a Limited Company Limit You?
For the vast majority of locums, they will either work through a limited company or an umbrella company. An umbrella company effectively treats you as an employee of theirs. They are responsible for getting you paid, deducting tax and national insurance and ensuring you are compliant with the law. This can be beneficial for some locums. This way you definitely get paid and it generally reduces hassle. However, working within your own limited company can really maximise pay and ensure you can claim back everything spent. This is something you do not get from an umbrella company. If you are a locum working in several different places, a limited company is likely to be best. It will limit you much less than an agency or umbrella company. In short, it is a simple process with definite benefits.
Expenses, Pensions and Other Benefits
The great thing about working through a limited company are all the extras you can claim. You can claim travel expenses and equipment for example. This is not something you can do under an umbrella company. You cannot claim employee’s pension through a limited company. However, there are independent pensions you can invest in instead and some are highly favourable. It can also be tax efficient to be in a limited company by using a combination of dividends and salary to pay yourself. Even for additional rate taxpayers, the rate is lower than normal, so it does make sense. These can legally reduce the tax paid overall and be of benefit to you. As a specialist accountancy firm for a range of medical services, we can help you with this.
IR35 is basically whether you count as an employee to the organisation you work with, or not. All public organisations as well as large and medium businesses are now responsible for determining the status of IR35. This applies to all contractors and freelancers such as locums that work with them. For the purposes of being a limited company, it is only working outside IR35 that is relevant. If you are not sure about this, look at the contract from the organisation you are working for. We are also on hand to help if there are any issues. It can be an excellent choice for those mainly or exclusively working outside IR35.
So, you can see, that in many situations working through a limited company is a positive choice. Our specialist accountants are ready to help your pay work harder for you. Contact us direct if you have any queries related to this blog. If you are considering moving to work under a limited company, then we can definitely help.