Ten tips for setting up your finances as a GP locum

25th September 2020 by Liz Densley

Ten tips for setting up your finances as a GP locum

Get off to a good start with advice from Liz Densley, a specialist medical accountant.

1. Tell HMRC that you have started working for yourself.

You can register as self-employed online at gov.uk , or ask your accountant to do it for you.

Do it as soon as you start. The absolute deadline is 5 October, after the end of the tax year. So for example a GP locum who starts in August 2019 must register by 5 October 2020. There are penalties for late registration.

Even if you are employed as a salaried GP this still applies to you. Even if just have a bit of self-employed income, over £1,000, you must still register as self-employed.

2. Decide on record-keeping system and keep it up to date.

Use a bespoke record-keeping system for invoicing and pension forms. Tie it in with a spreadsheet – ideally to match to your business bank account (NB LocumDeck includes its own bespoke accounts package, with exportable spreadsheets).

3. Keep receipts for expenses.

Upload to your accounting system or keep the paper – either way, you may one day need to show HMRC that you have actually paid for the expenses that you are claiming.

Honey Barrett has a handy checklist of typical expenses a GP locum may need to claim for.

NASGP membership is free for the first three months, then expensable after that. Join today.

4. Keep up to date with your pension paperwork.

Whilst HMRC flexed time limits because of Covid, if you don’t keep it up to date you risk making errors and affecting your pension entitlement in the future.

5. Make sure you save enough cash to pay tax, National Insurance and student loan repayments (and possibly the High Income Child Benefit Charge).

Remember your first tax payment will be a long way away – for an August 2019 starter, the tax will be due January 2021. But don’t get caught out: you will have to pay 2019-20 tax, plus half as much again as ‘payment on account’ for 2020-21.

6. If you are considering using a company, seek professional advice from an accountant who understands GP locum work.

There isn’t a black and white answer for all situations.

Remember you cannot backdate income into a company – you either invoice in the company’s name or your own name. You can’t just pretend income belongs to the company.

7. If you are using a company, make sure you know whether IR35 applies (and if it does, whether there is any benefit in having a company).

Make sure you know the different tax effects of taking salary or dividend or loan, as well.

Don’t just spend the money and expect the accountant to sort it out at the end of the year…

Join NASGP today to read all our resources on IR35.

8. If you are using a company, make sure you have a separate bank account for the company and don’t mix your own and the company’s money if possible.

This will make it much clearer for annual accounts and tax returns, and will reduce the risk of you spending the company’s money as if it were your own and creating unnecessary tax liabilities.

9. Do not buy a car in the company name without seeking advice first.

It could be highly expensive, or highly beneficial, depending on the choice of car. Your accountant can advise on the most tax-effective ways of buying your car.

Similar considerations will need to be taken into account for other capital purchases such as IT equipment.

NASGP sends weekly updates on all the news and financial changes that affect NHS GPs. Sign up for a free trial today. 

10. Use your accountant through the year – not just at the year-end to do your tax return.

Notify them if you have any significant changes planned for your life this year – selling property, gifting property to your spouse, or moving overseas. If we know before something is done, we can make sure you do it in the most tax-efficient way.

The information contained in this article is for guidance only, and does not constitute advice given by Liz Densley or Honey Barrett.  No responsibility can or will be accepted for loss occasioned to any person or entity as a result of action taken or refrained from in consequence of the contents of this article. Professional advice should be obtained before acting on any information contained herein, from your own accountant, or by contacting Liz at liz.densley@honeybarrett.co.uk for a free initial consultation.

More financial advice for starting out as a GP locum

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More financial advice for starting out as a GP locum

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