Are Tax Returns Mandatory for Veterinarians?

Being a vet is a rewarding career, whether you run a vet clinic or work on a call. Over time, the profession has evolved, and the ‘locum vet’ has given rise to the idea that you can work independently or full-time. You can also work independently full-time or do additional work alongside your job.

It can be daunting if you have been employed for years and are paying your taxes through PAYE or want to work as a locum vet. Self-employment has various benefits, including the freedom to choose when and where you work and set your desired rate. However, it also comes with extra administrative costs like recording daily expenses and completing tax returns. Once you get over it, you’ll find it was not as bad as you thought.

This guide will take you through a business structure and also paying taxes as a locum vet.

Easily access what you need by clicking the links below.

• Locum Vet? What exactly does it mean?
• What are the Criteria for Locum Vets Payment?
• What Business Structure Should I Choose Being a Locum Vet?
• Are locum vets affected by IR35 rules?
• Am I still employed if I choose an umbrella company?
• Do locum vets need to do a tax return?

Locum Vet? What exactly does it mean?

A locum vet works at different veterinary practices on an ad-hoc basis. This could be covering sickness holidays or having a specific skill set that requires them to be on site. In various cases, locum vets work for other veterinary practices nearby and nationwide.

It is perfect if you are a locum vet who wants to work all over the UK. It generates more work for you, and you can claim tax relief for accommodation and meals on your tax return.

What are the Criteria for Locum Vets Payment?

Being a self-employed locum, you’ll invoice your client and get the payment to either your business or bank account, depending on the business structure. In some aspects, locum vets work through an umbrella company. This is when you work for a separate third party that pays directly rather than giving the invoice to the client. The umbrella will cut off the income tax and National Insurance from your wages, making it feel like you are self-employed or not.

It’s also worth knowing that umbrella companies aren’t the same as recruitment agencies. They won’t get the work placements for you, so they’ll exist as a medium for you to work on it.

What Business Structure Should I Choose Being a Locum Vet?

Choosing any business can be very tough. You need to know tax efficiency, liability, and what you require. Business structure is not necessarily wrong, but doing business research and talking to an accountant is good. As experts, we have outlined some common business structures in detail.

Sole Traders

You own the business as a sole trader, and there’s no legal distinction between you. This is the advantage, and it depends on what you want from the company. Suppose you pay yourself by keeping the profit after tax, but this doesn’t mean you’ll pay income tax on all the business profit. Even when you leave the business, you can use your personal bank account rather than setting up a business account.

Tax is more straightforward for sole traders, so if you are a new locum vet, submitting a self-assessment will be less stressful than being a limited company owner who needs to complete company tax returns and submit accounts.

Limited Company

Being a locum vet with a limited company, you can be your director and pay yourself a salary and dividends that are more tax efficient. This also shows your liability as a limited company owner, so your assets are protected if anything goes wrong with the business.
This involves paperwork that is, to some extent, a disadvantage. It can also be less tax-efficient if your earnings are low.

Are locum vets affected by IR35 rules?

IR35 legislation should stop disguised employment. However, if you are a locum vet and go to the same veterinary practice everyday, do the same hours as other employees and act as an employee in all but name.

What hits differently is that you work with your limited company and send invoices to clients acting as your employer. They will pay bills without deducting the pricing.

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

The only difference is that you work through your limited company and invoice the ‘client’ who acts as your employer. They would 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 you’ll be taxed on that income even if you plan to leave it in the company. These deductions also fail to consider 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 your status must be determined correctly. It’s normal to have contracts inside and outside IR35, too.

Am I still employed if I choose an umbrella company?

Whilst you may be free 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 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 typically 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 you may also have to fill in a Self-assessment to report personal income if you take dividends.

You must keep up-to-date with the UK tax rates to ensure you’re paying the right amount of tax and maintain thorough bookkeeping records. This is a legal requirement for businesses in the UK!