What is the Best Way to be Paid as a Locum?
Making the right choice can be difficult
Locums carry out many different types of work and can be paid in a variety of ways.
The locum doctors we work for include:
- Salaried GPs completing single session appointments or regular retainer sessions in general practice.
- GP principals completing out-of-hours work or other private work.
- Doctors completing short-term or ad-hoc service contracts at hospitals.
- Consultants providing cover outside their NHS contracted work.
- Doctors working on longer term appointments to cover maternity leave, illness or sabbaticals.
How are locum doctors paid?
There are four main ways locum doctors can be paid:
- By a PAYE salary from an employer or an agency.
- Payment from an umbrella company.
- Payment from your own limited company (personal service company)
- Payment as a self employed contractor.
As a locum it is not simply a matter of being able to choose how you want to be paid, you need to make sure it meets with HMRC approval as well.
A combination of your contract and various tax rules may determine which payment method you have to use. Since 2017, the ‘off payroll’ working rules, (IR35) covers all NHS authorities. These now force many locums to be paid under the PAYE system.
Working for a Locum Agency
If you are engaged through an agency, the agency will almost certainly dictate how you are paid. For example, an agency is unlikely to pay you as a self employed individual and many offer you a higher sessional rate if you are engaged through an umbrella company or your own limited company (personal service company). Many agencies now have to comply with ‘off payroll’ working rules, (IR35) when they pay locums.
Counting the Costs
There are different costs associated with the different methods of being paid. If you are engaged through an agency, the agency will take its charges or commission. An umbrella company will charge separately for its services and you will probably need an accountant if you run your own limited company (personal service company) or trade as a self employed contractor.
NHS Pension Contributions
Certain categories of work carried out for NHS employers will be superannuable. However, you will not be able to make superannuation contributions if you are engaged through an agency, trading through an umbrella company or trade through your own limited company (personal service company).
How can we help
The best way to be paid is different for each locum doctor. We will review your contract and individual circumstances and advise you of your best option.
We are very experienced at this work helping many locum doctors throughout the UK with making sure they use the best method to optimise their earnings and pensions. Why not contact us today and we can start the process of helping you with your situation.
