Could a limited company be the right choice for locum doctors?

by Crunch Accounting : Mel Dixon

Many locum doctors in the UK work via NHS and locum agencies which handle their pay much like a direct employer would. However, there are other ways that locums or freelance GPs can go about finding work and getting paid for their services.

The locum doctor can provide work under a variety of different guises, including limited company, sole trader or umbrella company. And of course, the aforementioned more direct route…

NHS and locum agencies

By providing services through an NHS or locum agency, health workers are taxed at source under normal PAYE rules. This is fine for many as they won’t have to do any accounting or tax preparation. On the downside, it’s not the most tax friendly way of working as a freelance doctor and you are restricted in the expenses you can claim.

For healthcare professionals immigrating to the UK for the first time, it may be the preferred option as some agencies offer profession specific help and guidance.

Limited company

Running a limited company offers the biggest tax saving option and gives you the opportunity to be the director of your own company. For most people a limited set-up requires the services of an accountant unless you’re particularly sharp on tax filing procedures and day-to-day administration.

The tax saving benefits stem from the ability to pay yourself the right combination of dividends and salary, thereby avoiding National Insurance Contributions.

In the right hands, a limited company can be a simple way of doing business. Unfortunately, some accountants will leave you adrift in a sea of receipts, invoices, and documentation which you then have to gather up in an orderly fashion before sending it all over for them to sort out. However, if you have an accountancy service which keeps all your records safe and secure online whilst offering expert help and guidance, limited company life becomes incredibly simpler.

Limited company accounts are a specialty at Crunch

Sole trader

The major advantage of being a sole trader is that it’s the simplest way of running your own company. You also get to claim expenses (like a limited company).

The major disadvantage is that it’s not as tax efficient as a limited company – depending on how much you earn you could keeping a lot more of your pay with a limited company. As a sole trader you are liable for income tax and capital gains tax (which is a tax on selling or giving away assets such as property or vehicles).

Umbrella companies

Working freelance via an umbrella company is much like an agency set-up where the umbrella company sorts out your tax paying responsibilities, leaving you to simply hand in timesheets. They will naturally charge for the payroll service they provide, and it’s administered on a Pay As You Earn basis. So, it’s not tax efficient and yet still you have to pay for the privilege.

For umbrella companies promising high amounts of take home pay, be very wary. From April 6, a key offshore loophole is being closed which is used by most of these services – read more about such arrangements on this link.


There are a range of options for locum doctors in the UK, but without doubt the most rewarding is a limited company formation. At Crunch we provide qualified expert accountancy advice alongside our online software which enables you to automatically draw up invoices, easily record expenses and have a real-time snapshot of your incomings and outgoings – among many other capabilities. By keeping all your accounting needs in one place, life as a limited company director is surprisingly easy.

Find out more about how Crunch works

A discussion about NHS Smartcards

Please use this discussion to share your knowledge and opinions about Smartcards.

A representative from Connecting For Health, responsible for the implementation of the Smartcard, will join the discussion if necessary.

Here is some introductory information from CFH:

As an NHS Clinician you are likely to access some of the national NHS IT applications (including the Patient Demographic Service, Choose & Book, the Electronic Prescription Service and the Summary Care Record) whilst delivering the best possible care to your patients. It is therefore essential that you can access these applications securely and that any entries and/or amendments are auditable. This can be achieved through the use of your NHS smartcard and the correct allocation of role based access controls (RBAC). In the future access to certain GP IT systems (i.e. TPP SystmOne) will be dependant upon the insertion and validation of your smartcard.

Leave your replies below…

A discussion about the pro’s and con’s of a Chambers model

A description of a current Chambers model from Richard Fieldhouse

Like GPnetworks, we are NOT an agency and all locum work is superannuable and taxed as self employed.

ALL our members have ALL of their work booked through the chambers (it’s basically like a locum co-operative) by our chambers managers. Our rates within individual chambers are the same – they’re fixed – separate “single undertakings” (i.e. conventional independent locums) can not covertly fix their prices between them, but because a chambers is a “single undertaking”, locums within it can as rates are expressed overtly and trading is done collectively through the single undertaking.

We have a flexible range of sessions that practices can choose and each session is a fixed price. Practices LOVE this – they can budget ahead, know exactly how many hours of cover they can afford, all billing/invoicing and pension forms is done centrally (and on the same day each month!) – they can see exactly what they are going to pay for and there are no surprises when the invoice arrives.

Members love the simplified & standardised sessions too, and our 5 chambers managers ensure that both practices and locums understand fully what each and every session entails.

We have a sophisticated IT system that handles all the complexities of every booking (availability, confirmation, billing, locum/practice preferences, IT system, superannuation forms etc). Our chambers managers pay all the cheques for the full amount for each session direct into our personal bank accounts.

The prices each chambers charges for the locum sessions are around the same or around 10% higher than other locums, but this rarely seems to put practices off (quite the opposite – year on year we’re turning more and more work away, and across all our chambers we need to recruit 50 members just to cope with demand!).

All members are interviewed, and all members must attend at least 50% of their local chambers meetings (attendance is actually around 70-80%). At these meetings, significant events are presented, feedback to practices is organised, decisions are made, bookings etc etc are discussed. Summer parties, skittles, events all organised. Central information system collating all useful local info.

Members are now also being involved in a new professional scheme within the chambers – partnerships. These partners, or group of partners, are developing a specific-, general- or non-clinical area of autonomy and expertise with the aim of benefiting the rest of the chambers community. We also find that because our members aren’t professionally isolated, they usually more attractive to practices looking for salaried GPs or conventional partners.

Our chambers managers pay all fees from practices direct to our bank accounts, they organise the meetings and Ocado delivery for pizzas etc, personally teach all new members how to use our IT system, organise feedback from practices for appraisal and handle ALL our paperwork, including organising our IT system log ins at every practice and our smart cards.

Members are charged an average of 10% + VAT of their locum earnings for all of this. Some – the leader of each chambers – 5%, and new recruits in an EXISTING area 15% for first 150 sessions, 10% all else. All this is fully tax deductable. Because of the slightly higher rates, efficiency and dedication of our 5 chambers managers to book as many if not all available sessions (chambers managers have direct access to every members delegated availability) through their fantastic working relationships with practices, these fees seem to be more than offset by higher net earnings. Thay can also offer much better continuity of bookings too for locums and practices, so even more better value.

Whatever pricing structure locums go for to pay for their service, my advice is to use one that practices are prepared to pay for that delivers very easy, fast, effecient, simple, standardised sessions using the least number of different quality-assured locums who all know each other and really enjoy what they do.


A discussion about how to fund the GPnetworks service

From our communications with Practice Managers and Admin staff and with GP’s using the system, we can see that it is fairly unanimously accepted that GPnetworks offers a valuable service that has solved a problem and saves both time and money.

In 2010, there have been 9960 Practice logins, by 251 practices and 14375 logins, by over 350 GP’s.

However, as a result of the structural and fiscal changes taking place at the PCT level, next year GPnetworks will no longer receive any funding to operate its service.

This gives us two options:

  1. Close down the service
  2. Find an alternative way to fund it

We are therefore looking at developing the fairest possible model for funding the service via the two types of members that benefit from it:

  • Practices
  • GP locums

We are proposing to develop an annual subscription model that will allow unlimited access for a small fee.

We would welcome any views from members about this model and have created this anonymous discussion for that purpose.

Please read the views of other members before posting a comment.

Thank you

The GPnetworks Admin Team

A discussion about pay rates

What rate(s) should I be charging ?

A number of GP’s have asked us how much they should be charging for their time, both hourly and daily.

We are not in a position to answer these questions, but we can host a discussion on the subject so that GPnetworks members can share information with each other.

You may post anonymously (without showing your full name or email address)