Working as a vet is extremely rewarding, whether you’re working in a veterinary practice, or on-call. Over the years, the profession has become a lot more versatile, introducing what’s known as a ‘locum vet’ where you can work for yourself full-time, or as a side hustle separate to any employment you have.

If you’ve been employed, paying your taxes through PAYE, and want to start working for yourself as a locum vet, it can be understandably daunting. While self-employment has many benefits such as deciding when and where you work, and setting your own rates, it also comes with extra admin like recording day-to-day expenses and completing tax returns.

Once you get the hang of it though, it isn’t as bad as you may think. We can guide you through choosing a business structure, as well as paying taxes as a locum vet.

What is a locum vet?

A locum vet is someone who works at different veterinary practices on an ad-hoc basis. They could be covering sickness, holidays, or have a specific qualification or skillset that requires them to be on site.

In many instances, locum vets work for multiple veterinary practices, both close by and across the country.

If you’re a locum vet who decides to work all over the UK, this is great because not only does it generate more work for you, but it also means you can claim tax relief for things like accommodation and meals on your tax return.

How are locum vets paid?

As a self-emplopyed locum you’ll normally invoice your clients and receive the payment to either your business or personal bank account, depending on your business structure. In some cases locum vets opt to work through an ‘umbrella company‘. This is where you work for a separate third-party who pays you directly rather than you invoicing the client. The umbrella will deduct Income Tax and National Insurance from your wages – so while it may feel like you’re self-employed, you are not.

It’s worth noting that these umbrella companies aren’t the same as a recruitment agency. They won’t find work placements for you, so they only really exist as a medium for you to work through.

What business structure should I choose as a locum vet?

Choosing a business structure can be a tough decision. You need to consider things like tax efficiency, liability, what’s required of you etc.

There’s no necessarily ‘wrong’ business structure to choose, but it’s well worth doing some research and speaking to an accountant if you’re unsure. We outline some of the most common business structures below.
 

Sole trader

When you’re a sole trader you are the business – there’s no legal separation between ‘you’ and ‘it’. This has its perk, depending on what you need from the business. For example, you can pay yourself by simply keeping all of your profit after tax, but this does mean that you’ll pay Income Tax on all of the business profits – even if you leave them in the business! You can also use your own personal bank account if you’d prefer, rather than setting up a separate business account.

Being a sole trader can also mean tax is a lot simpler, so if you’re a new locum vet then you may find submitting a Self Assessment a lot less stressful than if you run a limited company that needs to complete Company Tax Returns and submit accounts.

It does have its (potential) downsides though, depending on your specific circumstances. For example, it could be less tax efficient depending on how much you earn, and you’ll also be wholly responsible for anything and everything that happens within your business.

Limited company

As a locum vet with their own limited company, you can appoint yourself as a director, and pay yourself a salary and dividends, which can be more tax-efficient. It also means your liability is ‘limited’ so your personal assets have some protection if anything goes wrong with the business.

This does involve more paperwork, which to some can be a disadvantage. It can also be less tax-efficient if your earnings are lower.

 
There are other business structures that may be better suited to you. We have a guide on the types of legal business structures you can choose when starting a business.

Do locum vets need to worry about IR35?

IR35 legislation was put in place to stop ‘disguised employment’. For instance, let’s say you’re a locum vet but you go to the same veterinary practice every day, do the same hours as the other employees, and basically act as an employee in all but name.

The only thing that’s different is that you work through your own limited company and invoice the ‘client’ who acts as your employer. They would just pay the bill without deducting anything or making employer NI contributions, and you could pay yourself a nice tax-efficient salary from the company. This arrangement would make you ‘inside’ IR35.

To reduce the risk of businesses abusing the system, the IR35 rules were introduced to close the loophole. If you are ‘inside’ IR35, your client may need to deduct Income Tax and National Insurance from your pay as if they were your employer.

This means that you’ll be taxed on that income even if you actually planned to leave it in the company. These deductions also fail to take into account the personal tax allowance (which is currently £12,570) so you might also end up paying more tax than you otherwise would, and then needing to request a tax rebate!

Working arrangements aren’t always as calculated as this though, and sometimes you can fall inside IR35 by accident so it’s important your status is determined correctly. It’s completely normal to have contracts both inside and outside IR35 too.

Am I still employed if I choose an umbrella company?

Whilst you may have the freedom to decide your hours and which veterinary practices you want to work at, you’ll technically be employed by the umbrella company. This means they’ll deduct taxes and National Insurance from your wages and pay you rather than the client.

You can opt to work for an umbrella company, and be a self-employed locum vet, but it’s best practice to check your employment agreement first!

Do locum vets need to do a tax return?

Yes a locum vet will need to submit a tax return. Like any profession, the way you pay tax depends on your business structure. For example:

• Sole traders will normally complete a Self Assessment tax return and pay income tax and National Insurance on their profits
• Working through your own limited company means you’ll need to complete Company Tax Returns and pay Corporation Tax – and may also have to fill in a Self Assessment to report personal income if you take dividends

It’s important you keep up date with the UK tax rates so you know you’re paying the right amount of tax, as well as maintain thorough bookkeeping records. It’s a legal requirement for businesses in the UK!

 
Learn more about our online accounting services for veterinary specialists. Talk to one of the team on 020 3355 4047, and get an instant online quote.