This article is part 1 of the series: Becoming a Locum Vet in the UK. You can find the whole series here.
The first question that any potential locum in the UK will need to answer can be a tricky one- do I want to work under an umbrella or a limited company?
What I’m referring to is the two most popular ways that locum vets operate in the UK- either as an employee of a large “umbrella” company, or as an independent self-employed contractor in your own limited company. With either of these options, you get to act fairly independently- you choose which practices you work in and set your own conditions and hours with the business that you work for. However your choice will affect how much work you need to put into the administration of your business, and ultimately how much of your wage you get to take home. Here’s the run down of your options:
Disclaimer: Please note that I am a veterinary surgeon, not a financial adviser or lawyer. I strongly recommend that you do your own research and contact your own financial advisers before undertaking locum work or starting a limited company.
Umbrella Company
Definition: A company that acts as an official “employer” to individual contractors.
Essentially, its a third party that handles the paperwork and legal stuff, sends invoices out on your behalf, sorts out your PAYE tax and national insurance contribution, then pays you your wage from the remainder.
Pro:
– Less paperwork
– Very simple to set-up
– Your compulsory tax (PAYE) and national insurance (NI) payments are taken care of
– May include employee benefits eg. professional indemnity insurance, pension contributions, connecting you with recruitment agencies etc
– Takes only minutes to set-up (once you sign up with your chosen company).
Con:
– Less take-home income- after taxes, expenses and the umbrella company fee, usually you’ll take home around 67-76% of what you charge your clients.
– Less freedom- some companies have a minimum number of hours per month that you must work to stay “employed”
When to choose Umbrella:
- if you plan only to be working as a locum short term, or infrequently
- If you want less hassle with tax, legal stuff and paperwork
- if you’re at risk of falling ‘inside’ IR35 tax legislation (more on this later)
Limited Company
Definition: A private company, that has its own legal identify from its directors, and whose owners are responsible for their own tax and debts.
Pro:
– Much more tax efficient, meaning more income- take-home 81-86% of earnings (minus your personal tax)
– Total freedom over your finances and work-load
– Can claim work expenses
– Takes under a day to set-up
Con:
– More paperwork- organise your own contracts, invoices and taxes (I use an accountant for this)
– Must be aware of IR35 legislation (more on this below)
– Must organise own insurance and pension fund
When to choose Limited:
– when you plan to locum long-term or on a full-time basis
– if making the maximum income is your priority
How to set up as an Umbrella Company
Getting started as an umbrella is easy, its essentially like becoming an employee of any other company. All you need to do is get in touch with the company of your choice, sign their contract, and they will guide you from there.
So, how do you choose which umbrella company to join? If you do a simple google search, you’ll find that there are a lot umbrellas that are eager your business. I’d suggest doing your own research, then calling the top two or three companies to compare the costs and benefits that they offer. Ask how much take-home pay you’d make, if there are set-up fees, and if they cover veterinary professional indemnity insurance- this will give you the best chance to find a good fit.
I decided to go the limited route, so I’m afraid that I cannot personally recommend an umbrella company to use. However, if you’d like a place to start your research, the companies that my collegues recommended to me were i4 and FPS. I’d also recommend joining the Veterinary Locum and Employment Network UK Facebook group as there are a number of recommendations from other locums on their forums too.
How to set up as a Limited Company
After doing my research, I decided that I wanted to make locuming my full-time job, including having the independence to stop working and take off on volunteering projects whenever I pleased. So I started my locum work through my own limited company.
However, starting up as a limited company is a little more involved than working for an umbrella. So I’ve made it the focus of my next post!
Click here to find out how start your own Limited Company for Locuming in the UK.
Please note- don’t forget that with either of these options, you still need to be RCVS registered and have the correct residencies and visas to work in the UK! You can read more about this on my post The Ultimate Guide to Moving to the UK.
Resources
For more info to help with your decision, check out these links:
- IT Contracting– for a more detailed comparison of the two options
- SJD Accountancy– for a simple explanatory video (Note that this is an accountancy website so may be biased!)
- Take-home income calculator for umbrella vs limited companies (again, from an accounting website that may include biases).
- Simply Locums– I can’t recommend a more helpful expert on the subject of Veterinary Locuming than Ben Sweeney, founder of Simply Locums. Ben’s a vet, a locum, and creator of this recruitment agency, which is designed to remove the hassle involved in connecting locums to the clinics that need them. I highly recommend checking out his website, and getting in touch with him if you need a little more direction getting started or finding work!
Now, check out the second article in my series, on Starting Your Own Limited Company
Or have you already decided on Umbrella? Skip ahead to discover the Essential Items you’ll need for Locum Work!
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