Whilst our FAQ Page touched on the subject of locum payments back in 2012, we thought it would be useful to expand on the ins and outs of locum finance – particularly as relates to Team Locum and agency work in general. We’ve broken down the guide into questions and answers so that all of the relevant information is easy to find…
DOES TEAM LOCUM TAKE A CUT OF THE LOCUM’S AGREED RATE?
No. The locum is paid directly by the client, and receives all of the agreed rate.
HOW DOES TEAM LOCUM MAKE MONEY?
The agency charges clients a booking fee for each individual shift it arranges. The booking fee is modest, making the system economically sound for clients, but the agency serves a very large number of pharmacies and opticians, and the high-volume of bookings makes the business viable.
HOW DOES THE LOCUM GET PAID?
Different clients have different payment systems, but the majority require the locum to leave an invoice at the store, afterwhich the client pays by BACS. Once a new locum’s registration is finalised, Team Locum will send her/him details of how to take payments from the various main clients. Team Locum can also provide new locums with a template invoice, should they request one.
WILL TEAM LOCUM HELP IF A LOCUM DOESN’T GET PAID ON TIME?
Yes. If a locum has invoiced as required but has not been paid as agreed, Team Locum will liaise with a client on the locum’s behalf. But since it’s not in Team Locum’s interests to supply locums to clients who don’t pay as agreed, this kind of issue will certainly not be a regular occurrence.
HOW MUCH WILL THE LOCUM EARN?
Most locums work for a variety of clients, and payment rates can vary from one booking to the next. Because locums are self-employed, technically, they decide on their minimum rate. However, the locum’s minimum will need to take into account competition and trends within the market. Some locums vary their minimum rate on that basis, and may, in particular, adjust their minimums according to season and/or demand.
HOW CAN A LOCUM EARN MORE?
A locum’s reputation has a very significant bearing on what she or he earns. A locum with a good reputation can not only secure more bookings – they may also be offered bookings with better payment rates. Building a great reputation lies at the centre of our Locum Science: Beating The Laws of Supply and Demand post.
WHAT ABOUT TAX AND NATIONAL INSURANCE?
Whilst working through Team Locum, a locum will be classed as self-employed. This means she or he is responsible for her/his own Income Tax and National Insurance contributions. A page on the HMRC website, which you can access via the link below, shows how income tax is calculated for different bands of earnings…
For the purpose of taxation, self-employed workers submit information about their earnings to HMRC, via an annual Tax Return. The basics can be accessed via the link below, again courtesy of the HMRC website…
Although Income Tax is paid in arrears, after the end of each tax year (running from April to April), it’s vital for a self-employed worker to keep accurate records of their financial affairs as they go along.
HMRC may request evidence of transactions after a Tax Return is submitted, so a locum should keep copies of their invoices, retain bank statements, remittances from clients, and any other evidence of incoming or outgoing finances. Accurate recording of any travel mileage which is not paid as an expense is also very important. Not only does retaining payment documentation cover the locum in instances where HMRC request evidence – it also helps with the accuracy and ease of completing the tax return itself. Whilst a locum may choose to hire an accountant (and it’s often highly recommended that they do so), taking responsibility for record-keeping throughout the year is almost certain to reduce the accountancy costs.
Here’s what HMRC advise on the subject of record-keeping…
You may have noticed, on the page we’ve linked to above, that there’s a simpler method of keeping records, aimed at sole-traders and small businesses. It’s called Cash Basis Accounting and it allows self-employed individuals to record their incoming finances based on when they’re actually paid, rather than when they submit their invoice. The link below shows a little more information on Cash Basis Accounting, from the official source of HMRC.
In addition to Income Tax, self-employed workers are responsible for paying their own National Insurance contributions.
National Insurance divides into different classes, but the classes that specifically apply to self-employed workers are 2 and 4. Full time locums are likely to be paying Class 4 contributions, due to their income band. However, it’s possible that a locum who only takes on a small amount of work may instead pay Class 2 contributions. The HMRC page we’ve linked to below shows the financial thresholds for the different variants of National Insurance for the self-employed.
I HAVE MORE QUESTIONS!
Whilst Team Locum is not a financial advisor and there are limits to the territory we can cover in this area, we’ll try to answer any additional questions you might have regarding locum work and the way the payment systems work. If you’re new to locuming, or are seeking to get started, you’re most welcome to get in touch using the contact details below…
The information in this post is supplied as a guide only, and should not be considered a legally-verified reference.