Written by Harry Marshall Reading time: 11 mins
Locuming does present some challenges which need to be taken into consideration before making the jump into becoming a locum. Below we share some common obstacles that can come with the increased flexibility of a locum role.
1) How to get paid
The first question you need to ask yourself is: ‘How do I want to be paid?’. Generally, there are two payment routes: through a limited company or through an umbrella company. They both have their pros and cons and there isn’t necessarily a ‘better option’ as this will depend on where you work your locum shifts, along with how many shifts you decide to do.
When setting up a limited company, you will become a company director. With this comes certain responsibilities and financial obligations; you will have meet tax deadlines, submit annual accounts to Companies House and of course, run the company responsibly and solvently. Many contractors choose to use a specialist contractor accountant to help them with the above (although it will still be the director’s responsibility to see that all obligations are met).
Operating via a limited company is generally the most tax efficient way of charging for your locum work. You would typically pay yourself a low salary, with the remainder being paid out as dividends. Dividends are not subject to National Insurance Contributions, which results in a tax saving and are also charged at different tax rates to being paid a salary via a PAYE scheme.
Another big perk of operating as a limited company is the flexibility that comes with being paid. You can choose when to take your dividends, along with how much you pay yourself. You can further reduce your tax liability by transferring some shares to a partner or spouse.
Limited companies are subject to Corporation Tax on their annual profits (at a rate of 19%), with VAT being added to your invoices and repaid to HMRC each quarter, after allowing for any VAT you may have reclaimed on company purchases.
Forming a new company is only £12 and you can complete the whole process online nowadays. You will also need to set up several other tasks, such as starting the company payroll and registering for Corporation Tax and VAT. Although many leave their accountant to set up all the above.
An umbrella company, is a company that you can join as an alternative to setting up your own limited company. When joining an umbrella, you become their employee and the umbrella acts as an intermediary between you and the practice. It deals with all the administration and means you don’t have to take on all the responsibility discussed above.
If you join a PAYE umbrella company, you will become an ’employee’ of the scheme. The practice pays the umbrella when you have submitted a weekly or monthly timesheet and you will receive a salary after deductions for tax, National Insurance, expenses, the umbrella fee, and any other pre-agreed costs.
It is not as tax-efficient a business structure to use as the limited company route, however it does represent a ‘hassle-free’ way to contract, which may appeal to contractors who are testing the water, short-term contractors, and those who do not want to take on any form of administration.
Different umbrellas charge different rates for using their service. We strongly recommend shopping around and asking for a transparent breakdown of costs to several umbrellas before making your choice as your monthly pay could differ significantly as some charge a weekly timesheet fee, others charge you for the employers National Insurance etc.
Since the introduction of IR35 (we cover this in more detail later) some of the big corporates will only allow locums to work through an approved umbrella company, which can significantly diminish your options should you want to work at corporate practices.
2) Where do I get work from?
As you may be aware, practices are currently screaming out for more vets and nurses. If you are an experienced vet, there is no shortage of opportunities. We are having practice owners reaching out to us desperate for some relief, on occasion having not had any time off for years due to not being able to find any cover. There are also lots of roles to be filled in between practices losing a team member a hiring a new one – at current, there is a significant delay between the two.
Whether you would like to work full-time on a locum basis, or only a couple of days per week, finding shifts should not be a challenge. We advise to set a limit on how often you would like to work before starting to search for roles. You will more than likely have to turn roles down and we have found that locums that don’t have a good idea of how often they want to work end up working longer weeks than when they were in a perm role! The Simply Vets recruitment team can help you find roles at the right practices for you – so please get in touch if you need any assistance.
3) How much should I charge for my work?
This is often a touchy subject, but we don’t think it should be! Going rates for a locum vet depend on a couple of different factors:
Length of contract
Urgency of requirements
Ltd Company vs Umbrella
How an umbrella company charges the practice
We would recommend you work back from a net figure to work out what you should charge. It’s a locum’s market right now, so you can charge more than what has been the typical going rate. Here at Simply Vets, we have a large range of locums with differing experience levels and skills. We find the net day rates for a locum vet are generally between £300 and £400. For a nurse, expect somewhere between £175 and £225 per day. If you are billing through a Limited Company, using an online calculator to work out your net figure will be sufficient. If using an umbrella company, liaise with them to come up with a figure that works. Different companies deduct different costs at certain points in the billing process, so charging £400 per day with one umbrella company might net you a very different figure to charging the same amount with another.
A draw back with being a locum is losing the benefits of being a permanent employee. These include having to pay for your own membership fees to RCVS/VDS and you will also have to pay for your own CPD. Although as Simply Vets is a sister company of The Webinar Vet, you get free access to their membership after your first month as long as you complete a minimum of 10 shifts per month when using the Simply Vets payroll service.
Be sure to ask your umbrella company their policy on sick pay, annual leave, CPD days, pensions and Employers National Insurance. Once you have spoken to a range of companies about the above, you will be best placed to decide which one is best for you.
4) Information overload!!
How techy are you? Do you find the practice’s operating system tricky? If you are travelling around or working at multiple practices you might have to learn a new operating system for each one. There’s two ways to look at this; either you get familiar with one operating system and slowing introduce a new one as you start to venture out to new practices OR you can go in at the deep end and go to 5 new practices as a locum in your first month and get familiar with them all early on! It’s completely up to you, choose what makes you feel most comfortable.
You will also work in multiple teams. This means lots of names, roles, working practices. If you are like me and cannot remember a face to save your life, try and pick a distinguishable feature about them and assign their name to that. Really tall? That’s Mark. Curly ginger hair? Debbie.
You will find that you collect codes and passwords at an alarming rate! Before you know it, you will have a multitude of logins and 4-digit keys to remember. You could write them down, but is that the safest policy? If you do have to write them down, try using a code (another one to remember… I know!) such as the 4-digit codes being in reverse order to open the door or passwords being in riddles… road name of first house, mother’s maiden name etc etc.
5) Where am I going?
An often-overlooked challenge of locuming is the planning aspect. The more practices you work at, the more practices you must keep track of. When transitioning from a perm to a locum role, suddenly there are differing start times, locations, and shift patterns. It can be tricky to stay on top of things, so it’s imperative that you are organised. Get a diary/calendar and write everything down. Don’t be the locum that forgets to turn up or walks into the wrong practice ready to go.
If you are a nomadic locum, there can also be a feeling of not belonging. Travelling to a new practice in a different part of the country every week or two can be taxing. We all know moving is tiring but travelling that often can feel like you don’t have a home. You need to be sure that this sort of lifestyle is for you before committing to being a nomadic locum long term. Maybe it’s best to work at your local practice first and throw in the odd week of destination work to try it out first. Or only book a month of work where you have to travel around. You can always book in more!
For those of you that don’t know, IR35 in plain and simple terms is legislation introduced to stop people being employed as a contractor by a company when they do the same job as an employee of a company. By working as a contractor, you can reduce your tax bill significantly via a Limited company.
Some corporate groups only accept ‘IR35 compliant’ locums. All this means is that you must use an umbrella company. They will have a list of compliant companies and will be able to put you in touch with any of their preferred umbrella companies to get you started. Many independent practices are still happy for you to bill through your own Ltd Company though.
You can check your IR35 status here. We recommend speaking to your accountant if you wish to continue operating as a limited company, but some factors that may be taken into consideration when determining your status are:
Working for multiple clients.
Having your own equipment. We don’t mean a consult table, dental machine or a set of stocks! However, having your own work clothing, your own stethoscope etc, would be wise in order to be able to offer your service to the client. If that client doesn’t have things, can you still do your job?
Set up your own business email address and consider having a separate company bank account if you are a sole trader.
Regularly apply for jobs/contracts at different practices
It may be advantageous if you are VAT registered.
Can you show evidence of your company investing in CPD training for you at any stage? This demonstrates evidence in a company (yours) investing in its own future.
Satisfying the above does not mean that you are IR35 compliant, but if you are set on working via a Limited Company, the above may help.
As mentioned in the intro, locuming is not always the simplest thing in the world and certainly does present its own challenges. Your main takeaways from this article should be to speak to an expert, use services that are offered to you and stay organised. Doing those 3 things should make your locum journey much simpler. If you want to speak to us about our payroll service, our jobs board or anything else locum related please don’t hesitate to get in touch.