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You may be considering becoming a locum doctor, and there are plenty of good reasons to make the switch from full-time employee to locum. With increased rates of pay, more flexibility when it comes to working, and the ability to become your own boss, becoming a locum is an attractive proposition.

Here, we take a look at some of the most important questions surrounding becoming a locum doctor, the tax implications and the steps you need to take to successfully become one.


Why Should I Become A Locum Doctor?

Before committing to becoming a locum doctor, it’s important to do your research and consider whether this is the right move based on your needs. There are plenty of reasons to become a locum doctor, but it’s worth remembering that this line of work isn’t for everyone, so be sure to weigh up the pros and cons based on your particular circumstances.

Short- or Long-Term Contracts To Suit You

Becoming a locum doctor is an attractive proposition for many, as you have complete control over how your career progresses, whilst also giving you the flexibility to take short- or long-term contracts based on your needs.

Being a full-time doctor or consultant in hospitals can be tiring thanks to long hours and a shortage of doctors on shift. So, if you’re looking to get away from the hustle and bustle of full-time work, becoming a locum can offer you genuine flexibility.

If you’ve recently started a family, or are just looking to have a healthier work-life balance, then becoming a locum can be an attractive proposition. You can often earn a fantastic rate of pay, work reduced hours, and maintain a healthy relationship between work and home life.

There’s no denying that choosing to be a locum doctor isn’t the easiest path, as you’ll have to deal with your own admin and accounting, but we believe that the pros outweigh the cons.

Choose From A Variety Of Work

If you’re not one for sitting still for too long, becoming a locum could be exactly what you need. When you’re a locum doctor, you can take contracts to suit your needs, so if you want to work in different settings regularly, you’ll be able to do this with ease as a locum. There’s always a demand for doctors right across the country, so you won’t be short of options.

You can quickly upskill in a variety of areas as a locum, so if you’re a young doctor and looking to gain multiple skills before settling into a more regular job, becoming a contractor could be what you need. On the other hand, if you’re a more experienced doctor but tired of the daily grind in your area, becoming a locum can offer you flexibility in terms of which areas of medicine you work in.

Choosing to become a locum is an ideal solution for almost anyone, as you can start to upskill in other areas, whilst also continuing to earn a fantastic wage for the work you carry out.

Increased Rate Of Pay

It may be possible to choose to use a limited company or umbrella company. Still, regardless of your choice, you’ll find that, in most cases, you’ll earn significantly more than if you’re a full-time employee.

As a locum, you’ll not only benefit from increased hourly rates, but you may also pay less tax and could possibly claim your expenses back in the form of tax relief. All of this combined will likely give you a sizeable increase in pay depending on how many hours and contracts you choose to pick up throughout the year. 

Doctor With Patient

How To Become A Locum Doctor

When you’re looking to become a locum doctor, the first step you must take is considering exactly how you want to work. There are a couple of options, with the most popular being to set up a limited company, as this is the most tax-efficient way to work in most cases.

The process of setting up a limited company is pretty straight forward and can be completed within a few hours, provided you have all of your documentation to hand. If you’d prefer to hand over the work to an expert, you should always consider utilising limited company accountants. They can set up your company, and take care of all of the monthly admin that comes along with this.

If you are looking to reduce the amount of admin and paperwork that you need to complete throughout your time as a locum, then you may be better served working through an umbrella company.

This way of working is completely different from operating as a sole trader, as you’ll be paying tax through the PAYE system, as well as National Insurance contribution at source. You’ll also be required to pay a fee to the umbrella company you set up, as you’ll essentially be an employee of that company. You’ll be responsible for obtaining any payment from your clients and then making the necessary tax and NI deductions.

Utilising the umbrella company option will definitely save you plenty of time and effort in the long run, but it’s worth noting that your take-home pay will be a lot lower than if you chose to operate through the more tax-efficient limited company.

IR35 For Locum Doctors

It’s important to consider IR35 legislation as a contractor or locum, as this can have serious implications if you don’t give it your full attention. As a locum, you’re required to ensure that you’re not considered a ‘disguised employee’. If you’re found to be in breach of IR35 laws, then you’ll be handed a fine and will have to pay back any taxes you owe too. If you are working in the public sector such as with the NHS it will be your client that determines your IR35 status.

It’s important to remember that when it comes to IR35, HMRC will focus on three main points to determine if locums are in ‘disguised employment’. These are:

  • Control – If you’re completely responsible for your case management and don’t need to be supervised – and if you don’t receive any benefits at all, including pension and holiday pay – then you may not be employee of the company.
  • Mutuality of Obligations – When you’re permanently employed, you have to do the work assigned to you; however, as a locum doctor, you’re not obligated to accept work that your client offers, as you’re free to make your own business decisions.
  • Right of Substitution – Are you able to supply another equally qualified doctor to take your place should you need to? If so, then you’re not providing a personal service, and you may not be considered an employee. If you can’t be replaced and can’t send a substitute in your place, this will mean you’re likely seen as an employee.

It’s worth noting that IR35 is assessed on a case-by-case basis, so you must do everything you can to avoid being in breach of the legislation. A sure way to ensure you’re acting within the confines of the law is to search for trusted accountants for locum doctors, who can help to guide you through IR35, enabling you to focus on your work, rather than the legalities of the legislation. 

Taxes & Expenses As A Locum Doctor

When you’re employed by a business, tax and national insurance are already taken care of by your employer as your income will be processed by PAYE, and your NI contributions will be automatically deducted from your pay. Though when you make the move to becoming a locum, you’ll find that you have to take sole responsibility for these outgoings.

An important consideration when becoming a locum doctor is having to deal with your expenses and taxes by yourself. It can be a time-consuming part of the role, so it’s advisable to seek assistance from experienced and trusted contractor accountants.

It’s worth noting that as a locum doctor, you’ll likely incur several costs during your work, and you may be able to claim these costs back as expenses during your tax return. As part of your weekly admin, you must take the time to keep records of all of your outgoings and keep documentation of any items you use exclusively in your work, as you’ll be able to claim tax relief on these products.

Here’s a list of some of the things you could claim as expenses as a locum doctor:

  • Work-related travel
  • Accountancy fees
  • Costs related to running a home office
  • Training
  • Purchase & maintenance of equipment related to your work
  • Uniform

If you’re planning on claiming tax relief for any of the above, it’s essential that you keep hold of any receipts or invoices for these costs. In most cases, HMRC won’t require you to present the actual receipt or invoice, but it’s good practice to ensure you keep all your documentation on hand, just in case HMRC does ask any follow-up questions about your expenses. 

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Want to find out more about how Gorilla Accounting can help you seamlessly transition into becoming a locum doctor? As sole trader accountants, we have years of experience dealing with all manner of accounting solutions for both new and experienced contractors and freelancers. As a technology-lead accountancy service, we aim to give all of our clients the very best service. To achieve this, we use FreeAgent accounting software, so all of our clients can rest assured that their accountancy is in safe, trusted and experienced hands at all times.

Don’t hesitate to send us your enquiry if you wish to learn more about how we can help you in your transition to becoming a locum doctor. Our friendly team are always on hand to answer any of your questions and aim to get back in touch as soon as we possibly can. In the meantime, why not make use of our contract tax calculator to figure out your take-home pay as a locum doctor?