Tax Payment Dates
Payment dates for Self Employed Locums
The date that you will first need to make a tax payment on self employment locum income will depend on when you first start to undertake self employed work.
The first thing you need to do is ascertain the tax year in which you start self employment work.
The tax year runs from 6th April through to the 5th April of the following year. Therefore someone starting self-employed locum work in August 2020 will commence in the 2020/21 tax year.
They will need to submit a tax return for this year prior to 31st January 2022. This will also be the date in which you will first need to make a tax payment. On 31st January 2022 the locum doctor will need to pay the tax due for the 2020/21 tax year.
Making Payments on Account
A locum doctor who also has a salary and only a small amount of locum work will often only need to make one tax payment a year on 31st January.
However, locum doctors with a higher proportion of self employment work compared to their salary will often also need to make payments on account. This will also apply to a locum doctor earning only self employment income.
The payment on account rules mean, for the example, that on 31st January 2022, this locum doctor would not only need to settle the liability for the 2020/21 year but will also need to make a payment on account for the 2021/22 tax year. A second payment on account is then due on the following 31st July. Each payment on account is half of the liability assessed for the previous tax year.
If you are a Salaried Locum
A salaried locum will often need to submit an income tax return annually. Tax and national insurance should be deducted under the PAYE system at source.
If there is an under deduction of tax in a tax year, this amount is repayable to HMRC on 31st January following the end of the tax year.
Locums trading through an Umbrella Company
The umbrella company will deduct tax at source under PAYE. The locum will normally need to submit an income tax return. Any PAYE under deduction is repayable to HMRC on 31st January following the tax year.
Locums trading through a Limited Company
The locum will have to deal with several taxes if trading though a limited company. Nearly always a PAYE scheme will be in operation. PAYE payments will be due to be made monthly. The locum will need to pay corporation tax annually. This will fall due 9 months after the financial year end of the company. It is likely that a limited company, subject to the ‘off payroll’ working rules (IR35) will have no liability to corporation tax. The locum will also need to prepare a personal tax return annually.
Any underpayment of income tax for the year will fall due on 31st January following the end of the financial year. Often a locum in these circumstances will fall into the ‘payment on account’ regime and may need to make a payment on 31st July each year in addition.
Effectively this means that in many cases, locum doctors have to pay two years’ worth of tax in a six month period. This can come as a surprise if professional advice is not sought early enough.
How we can help you
- Self employed – we can help you plan for the tax payments due so that you have sufficient funds to meet tax liabilities when they fall due.
- Salaried – we can advise you of any under deduction of PAYE to ensure you meet your tax liabilities when they fall due.
- Limited company – we can advise you of your PAYE tax liabilities, your corporation tax liabilities and your self assessment liability. We can advise you if you fall within the payment on account regime and ensure you meet your tax liabilities when they fall due.