Accounting for Locums
You are now fully qualified, and starting to practice as a Locum Doctor, and, as if the professional challenges weren’t enough, as a self employed GP you have to take on the extra responsibilities of your accounts and tax affairs. The Revenue, with no thought for the rest of us who have other things we would prefer to do at New Year (skiing anyone?) have chosen 31 January as the filing date for returns to be submitted and tax to be paid. So that you aren’t spending your New Year’s Eve filling in your paperwork it really pays to get organised from the get go.
You have to work towards tax deadlines, and the first one you need to remember is 31 January. You will be preparing your accounts to 31 March each year (that’s the easiest date to use by far, as it fits in with the tax year). The Revenue give you a generous ten months after the end of your first tax year as a self-employed GP in which to submit your return and pay your first tax bill, and so you’ll be left to your own devices until then, but don’t let this lull you into a false sense of security. You still have to let them know that you are self-employed, so that they can allocate you a unique reference number for submitting your tax return form. Don’t leave this until January 2nd as it takes them a while to process these applications and you will probably miss the filing date for the return, for which they will charge you £100 and deny any responsibility!
You have to decide whether or not you want to join the Locum Superannuation Scheme, and a visit to a switched on Independent Financial Adviser who knows about the various Superannuation Schemes (check that they do before making an appointment with them) is well worth the time and effort. He will also be able to give you tips on to how to save for those tax bills in the most efficient way. You will want to keep back at least 40% of your earnings for your tax bill so as not to have any nasty surprises when January comes around so very quickly and the Revenue are expecting payment.
Of course you will need to keep records of your income streams, but what about expenses?
You can claim for a lot more against your tax than you could as an employee, but you need to keep records to support those extra claims. Amongst other things you can claim for your subscriptions, motoring costs, the professional use of your broadband, mobile and home phone costs, stationery, printer cartridges etc. Some of these are relatively small items, but they all add up. Write them down. Even if you are not sure if it is allowable… write it down.
After your professional subscriptions, your motoring expenses are likely to be the biggest expense you will have. The Revenue are hotting up on doctor’s motoring expenses claims after a couple of successful cases in the Courts. You want to be in a good position if they challenge you, and to do this you need to keep a mileage log; a month by month record of total miles and private miles is what we usually suggest. You need to keep a note of your fuel costs too. Immediately visualising your passenger foot well filling up with petrol station receipts? The easiest way to avoid this is to always pay for fuel using the same credit or debit card – you’re less likely to lose track of your costs and as long as you keep the statements the Revenue will be happy.
How you keep your records is up to you, just make sure that they are clear, consistent and complete. A program that gives you the opportunity to record your income and expenses as you go along, (as well as other exceedingly useful stuff, like keeping your diary and raising your invoices) is a great tool, and that’s where Locum Organiser comes in, but you will still need to make sure that you record everything on it, a half completed expenses record will lead to relief for half of the expenses you could have claimed….
You should also consider using the services of a specialist medical accountant (of course, we would say that). An accountant can hold your hand through those early days, register you with the Revenue and make sure that your record keeping is ok, keep you on track for submission dates, complete your tax returns, and make sure you pay the right amount of tax ….at the right time. And if you are using Locum Organiser they can even take your accounts information straight from the program if you provide your log in details. On top of all this your accountant is a tax deductible expense and so you will get tax relief on up to 42% of their fees which is a bonus.
by Pete Farrier
Pete is Medical Director at Morris Crocker Chartered Accountants.
Morris Crocker offer a 10% discount on first year fees to those using LocumOrganiser