Are you thinking of becoming a GP Locum?

You have completed your training and passed your exams and you have made the decision to become a GP Locum. Up until this point, you will most likely have been employed and have had your tax, national insurance and superannuation deducted at source from your salary but, becoming a Locum means your status changes to that of being self-employed. Are you ready for this change?

Taxation

• You must register yourself with HMRC by 5 October following the end of the tax year in which you commence as a Locum, otherwise you may be liable to a penalty for failure to notify of chargeability.
• Good record keeping is essential, and you should keep a record of all income earned and keep receipts for all expenses incurred in relation to your Locum work such as professional subscriptions.
• Tax is paid on the profits you earn in any tax year. Therefore, if you earn £40,000 and have £5,000 of expense then you will pay tax based on £35,000 of net income.
• You also have two lots of National Insurance to pay on your profits alongside your tax bills;
  • Class 2 – at flat rate of £3.45 (2023/2024) per week on annual profits greater than £12,570
  • Class 4 – at 9% between on annual profits between £12,570 and £50,270 (2023/2024). You will also
  • Pay a further 2% on all annual profits (uncapped) above £50,270 (2023/2024).
• You may also have a student loan which is repayable based on level of earnings and whatever student loan plan you have. The loan repayment on self-employed earnings is payable alongside the January tax payment. 
• As a guide you should save around 35% of income to cover both tax and national insurance and 45% if you have a student loan as well. If you are a very high earner then you should be setting aside even more.
• Tax is paid by self-employed people on 31 January and 31 July each year. The January bill consists of the balancing payment for the previous year less any payments on account and also the payment on account for the current year which is calculated as 50% of the previous year’s tax bill. The July bill is the second payment on account.
• It is essential that you save money for tax and national insurance from day 1 of becoming self-employed or you may run into problems.
• There is a tax charge in relation to child benefit if you or your partner’s adjusted net income exceeds £50,000 and it is the partner with the higher income who is liable for the charge. If the adjusted net income for either of you is between £50,000 to £60,000 you lose one percent of the Child Benefit for each £100 over £50,000. If your income exceeds £60,000, you lose all of the child benefit paid. This will be repayable with your January tax liability.
• If your adjusted net income is in excess of £100,000 you lose any entitlement to claim tax free childcare hours.
• It can be possible to claim for repayment of tax levied on employment earnings on specific business expenses for four years from the end of the tax year to which the claim relates. This means you can request a tax refund on very specific business expenses previously incurred for things like professional fees, medical equipment and certain exam fees, and which have been omitted in calculating income tax under PAYE. Different rules apply to overpayment reclaims in other situations.

Superannuation

• Locums are eligible to contribute to the NHS Superannuation scheme. You will have to be on a Medical Performers List and should register as soon as possible by contacting your local Area Team or PCSE depending on where you are located.
• The NHS Scheme rules state that you cannot pick or choose which income is superannuated, therefore, if you are already a member of the superannuation scheme, it would be a breach of the Scheme rules if the locum income is not superannuated, subject to the 10-week rule (see below).
• GP Locum work that has been arranged and paid through a third party, such as a commercial deputising firm, a commercial agency, or a co-operative itself, is not pensionable under the NHS Pension Scheme. A GP Locum who trades as a limited company cannot pension their income either.
• GP Locum work performed more than 10 weeks ago cannot be pensioned.
• When you are employed, superannuation is deducted at source but when you are a locum, you must calculate your superannuable income, complete locum forms A and B and submit these along with payment of superannuation to either PCSE in England, the local health board in Wales and Practitioner Services in Scotland
• Tax Relief will be claimed as an expense on your tax return each year. The local Area Team should provide you with an annual summary of contributions paid each tax year. You should however keep records yourself and agree it with those provided.
• If you are a GP Locum and perform GMS, PMS or PMS+ work for an absent NHS GP, who would otherwise have performed the duties, you will be able to pay NHS Pension Scheme contributions on the gross pay you receive. Any NHS GMS, PMS or PMS+ work can be pensionable, provided there is a clear and direct transaction for the work, between you and the employing GP practice or absent GP.

Limited Company

A common question we are asked by Locums is ‘should I form a limited company?’ The answer is that this is not always the best option, in fact in the majority of cases, there is no tangible benefit but there is additional expenditure and administrative burdens. Therefore, you are always best to seek specific advice before going down this route.

Get in touch

If becoming a GP locum is something you are considering, and would like more information on how our team can assist, please contact us via the link below.

Contact us today