There are different ways to record your fee-based earnings as a GP locum – by date worked, date paid or even by date of invoice. From an HMRC perspective, the key is consistency. Choose a method and then stick to it, unless there are sound justifications for changing.
By date worked
Also known as the ‘accruals basis’ of accounting, this is possibly the most frequently used method (by many accountants at least) and means that your income and expenses are recognised and recorded in the year to which they relate. Benefits of this system are that your tax year is aligned with your “work year”. This can make it cleaner to settle up your tax liability for a year of work without having it spill over into another tax year. This can be important if you’re changing role e.g. retiring or moving into a PAYE role and you don’t want to carry over tax liability, requiring another year of self-assessment tax return.
By the date you were paid
Known as ‘cash accounting’, this means recording your income by the date you were paid. Perhaps less commonly used, it has the benefit that you only pay tax on income received. The disadvantage is that if you stop your fee-based work but receive payment in the next tax year, you will carry over your tax liability into another tax year, meaning another round of self-assessment tax returns. This may not be a welcome chore if you have retired or have moved into a PAYE role.
