Starting your career as a locum doctor offers professional flexibility and independence, but it also comes with unique responsibilities. Managing your finances and administrative tasks effectively is crucial to success. Here are ten essential tips to help you on your journey:
1. Register as self-employed with HMRC
As a locum, you must inform HMRC about your self-employment status. This step is essential to:
- Obtain a Unique Taxpayer Reference (UTR).
- Register for self-employed National Insurance contributions.
Failing to register by the 5 October deadline following the end of the tax year could result in penalties. You can complete the process via HMRC’s Self Assessment portal.
2. Set up a personal tax account
A Personal Tax Account is an online tool provided by HMRC that allows you to:
- File your tax returns and view tax liabilities.
- Check your National Insurance record and state pension entitlement.
- Update personal details such as your tax code.
It’s a one-stop platform for managing your tax affairs efficiently.
3. Keep detailed records of income and expenses
HMRC requires you to maintain accurate records of your earnings and allowable expenses for at least five years. Organised record-keeping is essential to:
- Simplify your tax return submissions.
- Avoid errors during audits.
You can use digital tools, folders for receipts, or software to track everything, ensuring compliance and peace of mind.
4. Understand tax-deductible expenses
Locum doctors can claim various work-related expenses to reduce their taxable income, such as:
- Professional memberships (e.g., GMC fees).
- CPD courses.
- Equipment for remote consultations, like headsets.
Ensure you keep detailed receipts and evidence for all claims. If your expenses are minimal, you can opt for the £1,000 trading allowance as a flat-rate deduction.
5. Open a separate bank account
While not legally required, having a dedicated bank account for your locum work helps:
- Simplify financial tracking.
- Clearly separate personal and business transactions.
It doesn’t need to be a business account: a separate personal account works just as well.
6. Budget for tax payments
Unlike salaried roles, locum work requires you to set aside money for tax payments, including Income Tax and National Insurance contributions. Be aware of:
- Payment on Account: HMRC often requires 150% of your tax liability in the first year (100% for the current year, plus 50% as a prepayment for the following year).
- Additional charges, such as student loan repayments or high-income child benefit charges.
Save a percentage of your income each month to avoid last-minute financial strain.
7. Consider locum-specific software
Tools like Locum Deck can streamline your work by managing:
- Invoicing and expense tracking.
- Pension submissions.
- Tax reporting.
These platforms are designed to reduce administrative burdens but must be updated regularly to be effective.
8. Understand NHS pension contributions
As a locum working directly with NHS practices, you can access the NHS Pension Scheme. To ensure contributions are correctly recorded:
- Submit Locum Forms A and B promptly (usually within 10 weeks of the session).
- Invoice practices for employer contributions alongside your session fees.
If you miss the deadlines, your contributions may be rejected, affecting your pension benefits.
9. Educate yourself on financial management
Your finances are an investment, just like your medical education. Take time to:
- Read about taxes and financial planning.
- Attend webinars or listen to podcasts tailored for medical professionals.
The more you understand, the better equipped you’ll be to make informed decisions about your money.
10. Seek advice from a professional healthcare accountant
Navigating the financial complexities of locum work can be challenging. A specialist healthcare accountant can:
- Maximise your allowable expenses while ensuring compliance.
- Handle your tax returns, reducing stress.
- Provide expert advice on NHS pensions and long-term financial planning.
By working with an accountant, you’re not just paying for a service: you’re investing in your financial success and peace of mind.
Final thoughts
Starting as a locum doctor involves balancing professional and financial responsibilities. By staying organised, leveraging digital tools, and seeking expert advice, you can focus on delivering excellent patient care while building a successful career.
For expert support tailored to locum doctors, contact Kudos Accounting. Call us on +44 20 3870 5385 to learn how we can help.