Who these days doesn’t have a portfolio career? Even if you’re not technically locuming at the moment, it’s pretty likely there will be opportunities over the coming months when you’ll be offered work outside your existing PAYE arrangements.
Running your business arrangements is not as simple as PAYE for salaried staff – you are still a business, which means ensuring you comply with all the accompanying red tape.
Registering as self-employed with HMRC
- When you first start you need to register as self employed with the HM Revenue and Customs and arrange to pay Class 2 National Insurance contributions. You can do this on line by going to HMRC’s website or your accountant can do it for you.
- If your projected net earnings are less than (£6,365 for 2019/20) consider obtaining exemption from Class 2.
- If you are also employed and paying Class 1 National Insurance, consider obtaining deferment of Class 2 and 4 National Insurance contributions.
Keep appropriate records
- Failing to keep records can attract a fine of up to £3,000 (and more if failure continues).
- NASGP’s LocumDeck includes a comprehensive free locum accounts package called Bookkeeper, completely free with NASGP membership.
- Records do not need to be elaborate – a simple spreadsheet recording income and expenses, backed up by invoices and receipts may be all you need. Consider a separate bank account and credit card account just for business items, this will make it easier to collate the information.
- If you intending to be a career locum rather than a temporary one, you may prefer to use bespoke software for your records that will also include your diary, invoicing and your pension forms.
- Pension your income using forms Locum A and B via NASGP’s fully automated LocumDeck, or do your own via the NHS pensions website. You must do this promptly each month – late claims are not permitted. Remember you can NOT pension your income if you route it through a limited company.
- If you are tempted to use a limited company to save tax and national insurance, make sure you discuss the situation with a pensions specialist so that you fully understand what you are losing by dropping out of the NHS scheme. Remember the main saving for using a company is the national insurance (and if you are also employed, that might be a much smaller saving than you expected); whilst company profits are taxed at only 19% (2019), if you are a higher rate taxpayer, you’ll have to pay a further 32.5% (2019) of any dividends you take out.