Making the right decision concerning your financial arrangements is a crucial part of undertaking veterinary 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 that came 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 an 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.
Limited Companies are perceived by many clinics as the ‘preferred’ way to engage a locum vets and can offer improved tax efficiency if you intend to work as a locum on a long term basis. There are set-up and year end costs involved, however if you have a friendly accountant and are happy to get involved with some of the administration of your own business, the rewards can be worthwhile.
An Umbrella service, in layman’s terms, is essentially a financial service that you engage to invoice and deduct Income Tax and National Insurance at source. They effectively become your payroll department.
They will invoice your practices for you, help you to maximise your earnings through compliant expense allowances, and can be engaged on a pay as you go basis. By taking care of your tax at source, you can avoid any complicated tax returns and eliminate the risk of an IR35 to the end client practice.
They are convenient and flexible, however over time their fees may total more than running your own company. There are additional National Insurance costs involved, and realistically you must be able to legitimately offset expenses to make the sums work in your favour, but as a shorter term solution it can be a good option if you prefer not to have to run the finances yourself.
The most common issue with working as a self-employed contractor is that many contractors are unaware that a worker’s employment status, that is whether you are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement and as such, you have to be aware of; and working with active compliance within the framework of the IR35 legislation.
Information gathered from the Inland Revenue suggests that as a general guide as to whether a worker is an employee or self-employed; if the answer is ‘Yes’ to the following questions, it will ‘usually’ mean that the worker is self-employed, however, the responsibility lies with the locum to establish their status for each and every assignment:
Self-employed individuals must have the right to substitute themselves (though this right may not be exercised)
As veterinary consultants this would be knowledge and maybe a stethoscope.
I.e. a fixed daily rate.
Consultants work within the practice hours and are in ultimate control of their treatment decisions.
Often the case for locums.
Ensure you have your own liability insurance.
There must also be a lack of mutuality of obligation stated in writing as part of your terms of cover. This is not a criteria highlighted by the inland revenue but is one of the basic principles of case law relating to self-employment status.
Just because a worker is self-employed in one job, doesn’t necessarily mean he or she will be self-employed in another job. Equally, if a worker is employed in one job, he or she could be self-employed in another.
Whenever you undertake a locum position, if you wish to invoice the client as a self-employed locum, you must supply the practice with your Terms of Business. This should be a document that sets out the terms under which you are working and illustrates your IR35 compliance. Providing your Inland Revenue Self Employed Registration Number to the practice is also helpful.
Deciding which type of contractor will suit your circumstances best can be confusing. Our team of experienced recruiters are on hand to answer any questions you may have and will offer advice where possible. The advice we give is based on an overview of information supplied by the Inland Revenue and as such, we recommend that you seek professional advice from a tax and accountancy expert.
Alternatively, visit the HMRC website for more information.
While we have many years’ experience in recruitment, we are not financial or tax specialists and would always recommend seeking professional advice.
Putting in the work to establish yourself as a self-employed locum vet or veterinary nurse is time well invested. Our veterinary recruitment agency has worked with a number of new self-employed vets so if you have any questions, need any advice, or just need pointing in the right direction, then please contact us.
Enhanced Pay Rates being Offered – Locum Staff shortages are seeing some positions attracting enhanced pay rates- Ask today.
IR35 – We have negotiated solutions and options for Limited Company Vets to continue operating. Ask today
Your Availability – Call us today and update your availability so we can get searching for you.