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The locum lifestyle: Does it still pay to be a Locum? [2018]

Does Locuming Still Pay?

This blog is all about answering the age old question: What can i earn as a Locum? Find out and learn some tips on how to make your financial security a priority in this blog.

When I started university over a decade ago, the locum sector was an abundant arena of well paid, flexible and attractive opportunities. Pay rates were uncapped across the NHS and loose tax laws meant that there was plenty of opportunities to earn a very decent living with minimal headaches. 

Fast forward a decade and the locum sector has changed dramatically, but does this mean that locuming is no longer a viable means of employment? In this article, we will look at how:
  • Pay caps
  • Updated Tax laws
  • Payment terms
have changed the locum field and how to comply with these changes while maximising your returns. 
Pay caps
Pay caps were introduced in 2015 to control how much money was paid to locums and in particular, the agencies that supplied them. Since introducing the caps on both locum rates and agency spend, the NHS has saved over £1billion and pumped that money straight back into patient services and care. Extra funding for the NHS, while brilliant, has led to many locums to question why the funding has been created directly by reducing the pay of much much-needed healthcare professionals. With Locums receiving reduced or no employee benefits such as sick pay, annual leave and so forth, the pay caps have certainly taken some of the sweetness of the locum lifestyle away.
, released by the NHS showing the updated price caps, makes for interesting reading. These tables are taken from the workbook show you what you can expect to earn, depending on your band and grade, within the first 12 weeks of locuming.
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The workbook can be confusing to read at first, with grades and bands each having their own subcategories of core, unsociable and location-based rates. In essence, if you take on an unsociable hours shift in central London, you can expect to earn a lot more for the shift, then working a normal 9-5 in a rural hospital. In many ways, the system has been designed to reflect the enhancements offered to permanent members of staff in similar locations.

Its important to note, that it is unlikely that you will see the full hourly rate highlighted in the tables. That's because they don’t take into account the fees removed from the rate by laws created by IR35. We’ll talk about this more in the next section.
So, what do the pay caps mean for your all-important take-home pay? Well, this depends on a couple things; how you pay yourself and where you currently work. For instance, paying yourself via an umbrella company rather than through a limited company will save you:
  1. Time: many umbrella companies require a simple set up, then just your weekly timesheet.
  2. Money: on things like an accountant (more on this below).
  3. Effort: you don't need to worry about paying yourself, paying tax or National Insurance.
This sounds great, but there are a couple of drawbacks. You can expect a chunky deduction from your overall pay. For instance, this calculator created over at Parasol, an umbrella company, can work out the difference in pay between an umbrella company and use our own limited company or being paid in a different manner. 
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The difference in pay (over £100 per week) is indicative of the hassle-free solution the umbrella company provides: You may see less of your pay, but everything that goes into your account is yours to use as you please. 
Updated Tax laws (IR35)
In 2017 the NHS updated its position on working through intermediaries (i.e as a locum through an agency or limited company). This change meant that the wages of locums were taxed “at source” (i.e by your hospital or surgery). This change means that your wages are taxed before you receive it in order to shut a loophole that meant locums could save money by not paying the correct amount of PAYE and other taxes. This updated law, however, only relates to agency staff who are being contracted to perform the same duties and responsibilities as colleagues around them.
So the system makes things fairer? Well, not necessarily. As the section above revealed, locums still need to pay tax on earnings when they receive it, so in essence, locums are being double taxed. 
You can find out if you’re subject to IR35 laws using this calculator. (You more than likely, will be). So with these laws in place, what is going to happen to may pay packet. Well, unfortunately, compared to before IR35, locums have seen their pay reduced by up to 20%. That doesn’t sound very appealing but there are a couple of important things to consider:
  • Your adjusted rate, compared to what you would be earning as an employed healthcare professional.
  • The added flexibility of being a locum.
  • The freedom that being a locum gives you in terms of career progression.
Before locuming, its well with speaking to a couple of agencies, accountants and umbrella companies to see if you can make the finances work for you.
Payment terms
Linked to IR35, some payment terms have changed for locums. For instance, some agencies no longer offer payment to a Limited company and instead will only pay you via an umbrella company. As detailed above this can impact, your financial health. There are, however, a number of benefits to the payment terms of being a locum. The standout benefit is weekly pay, that many locums have found to make controlling their finances much easier. As a locum, you are required to fill in a time sheet at the end of each week, which is usually processed a few days later, ending up with a nice deposit into your bank account. 

If you work for an agency, they normally provided you with a timesheet, but you can also download your own ‘invoice’ template to give to your workplace. There is no set method of getting paid, so prior to undertaking your shift, it's important to understand the terms of the contract so you can plan your finances. 

It can take anywhere from 24 hours to over a week to get your invoice or timesheet signed off and paid so it's really important to factor this in.
With over a hundred different agencies offering opportunities to locums for work, you may find that one agency is a better fit for you so its always worth having your options open. Cool management apps like the Locum Passport can help you join multiple agencies quickly with little fuss, getting you work from agencies that meet your criteria but there are other options for getting the best opportunities. 

In conclusion, the locuming sector still offers good rates of pay if you're looking in the right places and even though there are more barriers to finding the perfect role, by planning your work and asking potential agencies the right questions, the locum lifestyle can still offer you the financial security you desire and the rest of the added perks of being a locum. 

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