Locum rate calculations

[JonF]

Originally Posted by SolomonQ

yea i did forget the NI thanks for pointing that out but i still dont understand how NI is worked out for self-employed, is that 2.20 per week plus 5,250 (class 2 and 4),

I read it as £2.20/week for Class2 and 8% of profits in the £5225 - £34840 range and 1% on all profits above £34840 for Class4

[Pharmanaut]

Originally Posted by Jeff

Very short term calculation. Not enough for forward planning.
Tax rate changes in April 10% band goes and 22% is reduced to 20%
Expect downward pressure on locum rates - as the reduction in the number of potential employers continues to bite.
Decide what you want from pharmacy as a career.

Management/ownership offers the opportunity to expand your horizons as your relationship with local prescribers develops.

Invest any spare cash.
30 years down the line - playing at pharmacy forms only a minor part of my cash flow. (I avoided the term income because much of the "cash flow" isn't considered income by the tax man) - I use pharmacy and my self employed status as a means of claiming tax deductions. On paper pharmacy isn't really profitable - ie tax is minimal.

Jeff

How about doing an FAQ to share this information. I'd love to be able to limit my taxable income.

[Jeff]

Originally Posted by Pharmanaut

How about doing an FAQ to share this information. I'd love to be able to limit my taxable income.

Taking tax planning advice from a pharmacist is like taking pharmaceutical advice from a financial advisor.

Long term insurance backed regular savings can be tax free after a time, and then fund themselves until you need them.

ISA's are largely outside the tax regime

There's always the capital gains tax allowance to play with.

Dividends from venture capital investments are tax free. (and investments can be made to offset capital gains tax liability)

Pension contributions also offset tax.

Jeff

[SolomonQ]

Quick ammendments to the calculations based on all the (limited) positive feedback:

hrly rate:£23
hours worked pr week : 47.5
weeks worked in a year:47/52 (5 weeks off)

works out as: >£51,000
so take £50,000 for tax purposes

TAX on this (2008-2009):

personal allowance: £5,435
so taxable income: £44,565
first £43,000 at 20%= £8,600
£1,565 at 40%= £626

Total: £9,226
incom after tax : £40,774

NI: weekly income 50,000/52= £962
first £87 none
87-670= 11%=> 64.13
670+=1%=>292x0.01=2.92
total weekly= £67.05
total annualy= £3486.60p --> £3,487

total income tax and NI: 9226+3487= £12,713

Approximate Income after income tax and NI (2008-2009): £37,287

(No other allownaces have been taken into account, so the post tax/NI income would be more, things that can be claimed are the RPSGB registration fee (saves about £160 at current £395),fuel cost, etc etc...)

gives a more accurate result than before , any comments people?

[Titch]

Not really sure what you are wanting us to comment on?

[Zoggite]

Comments:
-47.5hrs/week is very hard work!
-no allowance made for the 8 statutory bank holidays;
-the new threshold for the 40% tax bracket won't apply until 2009/2010, not next financial year;
-and by then, NI contributions will be 11% over the full amount, not just on the first £670/week...

[SolomonQ]

What I want you to comment on?

I concede

NOTE TO SELF: When i qualify, get an accountant to work out my taxes, the meesley fee i will have to pay them is worth it.

[Titch]

Originally Posted by SolomonQ

What I want you to comment on?

I concede

NOTE TO SELF: When i qualify, get an accountant to work out my taxes, the meesley fee i will have to pay them is worth it.

Accountant fees can be offset against your tax bill so can be worth using one.

Wasn't being funny just not sure what you wanted us to comment on as we'd already commented on first post & then you corrected figures.

Like I said before not quite as simplistic as you make it because your tax bill can be reduced even further.

Not sure if you are trying to predict your income as a locum or comparing a locum vs employed. As zoggite said 47.5 hours is ok short term. I'd also factor in bank holidays and consider what I mentioned about taking a break rather than working through. If 47.5 hours is based over six days then fine.

[SolomonQ]

thank you for your input titch, just wanted to know if my new figures were more accuate, anyway what I was doing was trying to predict the average salary of a registered pharmacist working as a locum, the figures could be compared to employed pharmacist wage if need be

[johnep]

If you ask lloyds, they will send you all the details as currently trying to convince locums to become managers.
johnep