Setting up a limited company for locum work for GPs

8th August 2013 by Liz Densley

Setting up a limited company for locum work for GPs

You can potentially save tax/NIC by putting freelance income through a limited company: however, you are not permitted to pension such income through the NHS scheme.

Now that the practices are responsible for paying the 14.3% employers contribution – and are using that to negotiate fees downwards (unless you’re part of a locum chambers where you have much stronger negotiating power) so their net costs don’t change , some of that advantage may have been lost. However you should not underestimate the value of the NHS pension scheme.

Let’s assume a worst-case situation, where a practice will pay you the same amount whether you are in the pension scheme or not. As a self-employed locum earning £80k a year after expenses (before deducting superannuation), you’d be left with £44,128 in hand after superannuation/tax/NIC.

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Related FAQs

How can a GP claim the NASGP Locum Chambers subscription as a tax expense?

Fees paid to your NASGP Locum Chambers are tax deductible.

Your accountant will be able to give you personalised advice. Generally, the suggestion would be to show the fee on your tax return as either ‘other office costs’ or ‘admin support’ rather than ‘professional subs’ (which normally relates to membership of a professional body, rather than buying a specific service). So long as it is analysed consistently, it doesn’t really matter how it’s classified on your tax return.

Which training costs can GP locums claim for?

The rules for salaried GPs and self-employed GP locums are different.

Get the latest advice on expenses and tax relief from this 2023 article by Liz Densley and Tori Ferguson of Honey Barrett. 

Salaried GPs

If you are a salaried GP you can only claim for courses that are ‘wholly, exclusively and necessarily’ in the course of your work. The ‘necessarily’ is the tricky bit – because that would mean absolutely anyone doing that job would have to do that course. The effect of this is that generally salaried doctors cannot claim training costs, so ideally get them built into the remuneration package so that the practice pay for them. Providing it is work related, it will not be a taxable benefit.

There was talk of training being treated differently just before the 2018 Budget, but nothing came of it. Be aware that the rules may change in the future.

GP locums

If you are a self-employed doctor, you can claim for courses that are ‘wholly and exclusively’ for the purposes of your work. This gives much more scope.

Generally any courses that are keeping you up to date or improving your existing skills will be deductible. Anything unrelated to your work won’t of course – so a GP couldn’t claim for a course on plumbing or bricklaying!

A new qualification – or something that enables you to do something that you cannot currently do – will be treated as ‘capital’ and will not be deductible. There is a grey line between what is a new skill and what is an extension of an existing skill – and that needs professional advice when it arises.

What does ‘wholly and exclusively’ mean? Generally there won’t be personal benefit in a course, but beware ‘holiday’ courses where HMRC could argue that the holiday element is more than an incidental part of the cost. Once there is ‘duality of purpose’ (such as a holiday with some training), HMRC are within their rights to refuse the whole of the claim.

What is the cost of the course? That will be the course cost itself, any related reading material etc, travel to get there, subsistence and reasonable accommodation (if it is not reasonable to return home).

What if you are both salaried and self-employed?

It will normally be acceptable to claim course costs against the self-employed income. If HMRC want to be awkward, they could argue duality of purpose – because you can’t learn something and only use it for your self-employed work. We had this point made in an investigation some years ago, but HMRC did back down and agree the cost in full against the self-employed work (but on a reasonable basis, rather than under the letter of the law). If you are trying to claim for a £5k course against £5k of locum work when you are employed full time, expect it to be questioned!

Can I invoice for two months with the same Locum A?

LocumDeck allows you to put several months onto one invoice, and will generate one Locum A for all that work. A Locum A form is a certificate of income paid, so it can cover more than one month.

And when it comes to keeping a track of your earnings, the Bookkeeper accounts package built into Locumdeck allows you to view your income either by the date you worked or by the month it was paid.

Watch our video to see how to create an invoice on LocumDeck.

Read more: How to file pensions paperwork from 1 Oct 2022

How do I send an invoice?

Watch our video to see how to create and send an invoice on LocumDeck.

A locum session becomes ‘ready for invoicing’ once it is underway – it then appears as pale blue in your calendar.

  • Invoice session by clicking the session on your calendar or via Invoices >> Create invoice. The “Select practice” dropdown will show you all your practices that need to be invoiced.
  • Select a practice to see a list of sessions that are ready for invoicing
  • When you tick the sessions you want to invoice, you will see the invoice preview, complete with automatic pension calculations, appear on the right hand side:
    • SEND – Emails any attached Locum Form A to the practice and become viewable online to them on LocumDeck.
    • SAVE AND EXIT – Saves invoice (and any Locum Form A) to ‘All invoices’ without sharing with the practice.

In both cases, your invoice details and any pension contribution are automatically saved in Bookkeeper.

What does LocumDeck’s Bookkeeper do?

Locumdeck’s Bookkeeper updates itself completely automatically from the rich information generated from all the travelling and locum work you do, and also allows you to add other financial data too to cover all your self-employed work. At any time, you can export any data you need, and also generate a smart financial report for your accountant or financial advisor.

Bookkeeper is integrated into LocumDeck – click on the Bookkeeper tab at any time to integrate the pages of information within.

Automatic record-keeping for GP locums

  • Smart session counter to help you work out the number of four-hour equivalent sessions for indemnity purposes.
  • Number of sessions worked.
  • Total amount earned.
  • Breakdown of employer pension contributions.
  • ‘Reimbursed’ travel costs as applicable (not part of your pensionable pay).
  • Paid/unpaid status of invoices.
  • PDF copies of all invoices and automatically completed Locum A and B forms.
  • Mileage (automatic):
    • Between home and GP practice.
    • Between GP practices.
    • Individual journey details.

Manual expense-keeping

  • Cremation fees
  • Medical reports
  • Private work
  • Lecturing
  • Appraisal
  • Work invoiced outside of LocumDeck
  • Export reports
    • Fees
    • Earnings (by date worked)
    • Invoices and pension contributions
    • Mileage
  • Mileage (manually added)
    • Visits
    • Other work travel
  • Expenses
    • Subscriptions
    • CPD
    • Admin expenses
    • Travel expenses (other than mileage)

So much of Bookkeeper has been made possible from generous feedback from our existing users of LocumDeck and the support of Liz Densley and her team from Honey Barrett.

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Do I need to register for VAT as a GP locum?

It’s very unlikely that you’ll need to register for VAT as a GP as, typically, medical services are not subject to VAT.

There is a wealth of information here on HM Revenue & Customs website, and it’s also worth having a word with your specialist medical accountant. We recommend Honey Barrett or another AISMA member.

Do I pay tax on the employer’s contributions of my NHS pension?

No, you do not need to pay tax on the employer’s contribution to your NHS pension.

Read more on NHS pensions

How do GP locums invoice for their work?

Watch our video to see how to create an invoice on LocumDeck.

Invoices are important legal documents as they are the record of the payment trail needed by both you and the practice for your respective accounts and tax records.

GP locum invoice essentials

Legally they must include certain information:

  • A unique identification number.
  • Your name, address and contact information.
  • The name and address of the customer you’re invoicing.
  • A clear description of what you’re charging for.
  • Any expenses you are claiming (e.g. travel costs).
  • The dates of work.
  • The date of the invoice.
  • The amount(s) being charged.
  • The total amount owed.

Other important invoice information:

  • Your preferred payment method.
  • Payment due date.
  • Payment reference to help you track that payment has gone into your bank account.
  • Employer’s contribution.

To get paid you need to generate and send invoices. If you’re pensioning your GP locum income in the NHS pension scheme (NHSPS), you’ll need to send an accompanying GP Locum A pension form for the practice to complete, certifying that you were paid for doing eligible NHS work.

In England & Wales, your invoice and GP Locum A pension form will need to include a charge to the practice for the employer contribution to your pension.

You’re also going to need a system for keeping track of when you’re paid. And, if you’re pensioning your GP locum earnings in the NHSPS, you’re going to need to set aside some time at the end of every month to assemble all your pension forms, work out what pension contribution you need to pay, and send your payment and paperwork to your relevant pension administrator. Building a routine is key.

Would an NASGP Locum Chambers GP fall under IR35 tax legislation?

One of our members asked recently: “In the Gov.UK IR35 questionnaire, it asks ‘Do you provide your services through a limited company, partnership or unincorporated association? An “unincorporated association” is an organisation set up by a group of people for a reason other than to make a profit. For example, a voluntary group or a sports club’. As I work through NASGP Locum Chambers, should I tick yes?”

Our specialist employment lawyer advises: “The answer is no. Although NASGP Locum Chambers assists the locums in locating employment, the GP locum is not providing his services ‘through’ the chambers. That would only be the case if the chambers was the contracting party with the Medical Center.”

Read more on IR35.

How do GPs invoice for sessional work on LocumDeck?

A locum session becomes ‘ready for invoicing’ once it is underway – it then appears as pale blue in your calendar.

  1. Invoice session by clicking the session on your calendar and using the menu (blue circle with three white dots) or via Invoices >> Create invoice. On Create invoice, the “Select practice” dropdown will show you all your practices that need to be invoiced.
  2. Select a practice to see a list of sessions that are ready for invoicing.
  3. When you tick the sessions you want to invoice, you will see the invoice preview, complete with automatic pension calculations, appear on the right hand side.
  4. Either: Hit SEND and the invoice and any attached Locum Form A will be emailed to the practice and become viewable online in their LocumDeck. Or: Hit SAVE and EXIT to save the invoice (and any Locum Form A) to ‘All invoices’ without sharing with the practice.

In both cases, your invoice details and any pension contribution are automatically saved in Bookkeeper.

Can I invoice on LocumDeck for sessional GP work booked off LocumDeck?

Yes, you can  invoice for work on LocumDeck for work booked outside of LocumDeck.

  1. Add the practice to your LocumDeck address book (it’s called “My practices”).
  2. Add your sessions at that practice into your LocumDeck calendar.
  3. After you work your session, create and send an invoice in the usual way. (If you claim NHS pension on this session, LocumDeck will also generate a Locum Form A and update your Bookkeeper data).

If you have already invoiced a practice outside of LocumDeck, but want to record it within Bookkeeper, then instead of pressing the SEND button, leave the sessions as “ready for invoice” on the calendar. Bookkeeper will pick up the fee and include it in your earnings.

When should I send invoices for locum work?

Whenever and as often as you like. There are no rules. Some invoice at end of month, others bi-weekly. But it’s probably more important to build a habit of regular invoicing and pension admin that fits your work routine.

Our experience is that most locums invoice at the end of the month.

One time-limit to be aware of with invoicing is that you cannot pension work that was carried out more than 10 weeks ago.

Can I print my invoice?

Yes – from ‘All invoices’, click VIEW to access a downloadable PDF file of the invoice. Practices can also download or print invoices from their LocumDeck account by clicking on the invoice number/reference.

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Claire Farragher, Practice Manager, Regent Street Surgery, Stonehouse, Gloucestershire

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