Employed or Self-employed, Ltd Co or Umbrella?
Making the right decision concerning your financial arrangements is a crucial part of undertaking locum work. It affects your earnings and in some cases, can affect your suitability for specific vacancies. We have seen a change in the way locum’s work, and in the preferences of client practices and how their practice policies can affect your search for work.
Historically most locums were self employed, and we’ve retained the information provided by the Inland Revenue below to give you some useful information on the process of establishing self employment status. We are however seeing a definite shift towards a clinic preference for locums who are either using an Umbrella company or running their own Ltd Co. There are pro’s and con’s to both, and their appropriateness for your situation will vary. Working as a self-employed contractor though can pose significant limitations on the availability of work so it’s definitely worth exploring what other options may be suitable for your situation. There are also legislative changes coming in, in early 2016 that will affect the way that an Umbrella Co can maximise the expenses legislation on your behalf and so the use of an Umbrella Company is likely to become much less cost-effective. Setting up a Ltd Company can seem daunting but with the right advice and information, it’s actually a lot less stressful than it may at first seem and is worth exploring if you are undertaking locum work for more than a few months.
Overview of the ‘usual’ contractor options:
- Can they hire someone to do the work or engage helpers at their own expense? Self employed individuals must have the right to substitute themselves (though this right may not be exercised)
- Do they risk their own money?
- Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves? As veterinary consultants this would be knowledge and maybe a stethoscope.
- Do they agree to do a job for a fixed price regardless of how long the job may take? I.E a fixed daily rate .
- Can they decide what work to do, how and when to do the work and where to provide the services? Consultants work within the practice hours and are in ultimate control of their treatment decisions.
- Do they regularly work for a number of different people? Often the case for locums.
- Do they have to correct unsatisfactory work in their own time and at their own expense? Ensure you have your own liability insurance.
Please feel free to contact us for further information to clarify what can be a confusing area. We can provide you with an overview based on information supplied by the Inland Revenue – however we absolutely recommend that you take professional advice from a tax/accountancy expert.Some Useful contacts: IR Self Assessment order line on 0845 900 0404. IR Help line for the Newly Self-Employed on 0845 9154 515 Link to the HMRC website