some questions about consultancy/locum working from an absolute beginner!

[bowbluebell]

Hello

I work as a psychologist and am employed in local government for two days a week. I have been offered some local work with another local authority and am also considering doing some freelance consultancy/private
work.

I know that this will be fine with my present contract as all my colleagues are at it!
However, I was just wondering if any of you can give me an idea about how this set up works in terms of tax etc. Presumedly for private and consultancy work I am self-employed and would need to complete a self assessment tax form? I understand there is an exemption form for NI contributions if earning less than £5000. How would my income tax work as a locum? Would they just take out PAYE and at what rate? NOne of this work would take into the higher rate of income tax (shame!).

Is all this form filling and organising dreadful? Is it worth getting an accountant to do it?

If the consultancy/private work picks up, it is worth setting up a business?

Many thanks

Sorry, locum, not local.

My dh has worked as a GP locum on and off over the years. Locums usually get paid gross so you have to pay tax/NI/superann yourself.

You need to do a tax return. Its pretty straightforward if you have a simple locum agreement, but more complex if you work in different places.

Its worth having a word with an accountant, just to get advice on how to go ahead (we did this) but its perfectly possible to do the return yourself.

You do have to be organised to keep records of things like travel expenses/work expenses/extras etc. We have a big folder with different pockets where all the receipts go etc ....

Good luck!

Hi bowbluebell - good luck with your new venture. I was in your position - had a part-time job, got offered some consultancy work on top. (I'm now exclusively freelance, having been made redundant from the p/t job, but that's another story.) You have to register as self-employed with the HMRC and they send helpful information about how the NI works etc. The NI contributions aren't very much - about £20 a month from memory (pay by direct debit so am a bit hazy about how much) - and as you say you can apply for an exemption if you're earning less than the threshold. I didn't find the tax return too time-consuming. Certainly not worth paying an accountant if you're just taking a straightforward daily rate.

I slightly disagree with weegiemum - I don't think working for multiple clients makes it any harder. You just have to give your total freelance earnings, you don't break it down by clients.

One thing to be sure of though is to keep expenses claimed from your employer and freelance expenses completely separate. You don't need to include expenses paid by your employer provided they have an exemption (am sure a local government body will).

You will also have to include all other income on your tax return - including interest on bank and building society accounts which is a bit of a pain (even if you've already paid the tax on them), so make sure your records for those things are up to date.

Hope it goes really well!

Sorry - you also asked how the tax worked. You'll get paid gross for your freelance work. For your first year, you won't actually have to pay the tax to HMRC until you do your tax return. Once you've done one, though, they will take a payment on account for the second year straight away, with another due in a few months time. If you think you won't earn as much in the second year as in the first, you can apply to reduce your payments on account.HTH.