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  • Locum Rate Calculations - thread moved

    I like to be on top of my finances (habit from my uni days) because it helps me plan my future etc... so below are some calculations ive done, please feel free to comment:
    FIRST THE GROSS INCOME (i.e. before tax)

    Hourly rate of £23 (pretty average, easy to achieve)
    work a shift of 9.5 hours (i.e. full day no lunch (9am-6:30pm))

    That would mean £218.50 per day

    Work 5 days a week (dont wanna be greedy do we) results in £1092.50 per week

    assuming 6 weeks holiday (as one would in proper employment) results in 46 weeks working

    so annual income would be : £50,255

    so the above is for working 47.5hrs per week with 6 weeks holiday (these could be days off coz u didnt feel like it)

    Please note: 50K is generally easily achievable as even if the pharmacies are open for say 9 hrs or you get an hours lubch break, from some pharmacies you can get rates of £25 or more. £23 is the ultimum minimum really.

    NOW NET PAY (AFTER TAX)

    here we will take 50k as the minimum income for this bit, so If you were to report all this income to the tax office people like you should, your tax burden at the end of that year would be:

    50,000-5250= 44,750 (personal allowance=~5250)

    so out of the 44,750 tax deductable first 2250 is 10% = £225.50p
    next about £31,250 is taxable at 22%= £6,875
    anything ernt above £33,400 is taxable at 40%
    so (£50,000-33,400)x0.4= £6,640

    so TOTAL TAX= £13,740.50p call it £13,750 to nearest £250
    so NET INCOME=£36,250
    OVERALL TAX PAID AS % OF INCOME (50k)= 27.5%

    (NOTE: the above doesnt include other allowances exempt from tax such as reclaiming VAT on fuel used to travel to work, so the net income would actually be a bit more HOWEVER ive not taken into account taxes such as council tax and TV license (YES its a POLL TAX) etc... also remember you pay VAT on everything you buy including food and electric/gas/water, ~75% cost of fuel you buy is fuel duty and VAT on top of that (a litre of pet actually only costs ~25p), road tax, (car)insurance, congestion charge in london etc...)

    wat do people think of my numbers? are they reasonable?
    We are the music makers, We are the dreamers of dreams and God damn we are that good

  • #2
    Re: Locum rate calculations

    sorry forgot to mention the abvious, the above calculations are for a qualified pharmacist working as a full time professional locum, thanks
    We are the music makers, We are the dreamers of dreams and God damn we are that good

    Comment


    • #3
      Re: Locum rate calculations

      What about NI contributions?

      If you are self employed i think you need to pay Class 2 and Class 4 contributions, see here for current rates

      Comment


      • #4
        Re: Locum rate calculations

        I don't understand the TV licence bit. How is having a TV related to being a locum? Is it so you can view the Lloyds and Boots adverts for CPD or something?

        Comment


        • #5
          Re: Locum rate calculations

          I thought they were scrapping the 10%-tax bracket?
          Ze genuine Article, present & perfect!

          Comment


          • #6
            Re: Locum rate calculations

            You've forgotten that the tax man allows a locum (or their clever accountant) to claim various allowances which materially reduce the tax bill.

            Thus reasonable motoring expenses can be offset against tax (treat the miserable mileage payments simply as extra income, I run a three litre sports coupe and the mileage payments don't come close to the running costs), computer expenses can be claimed, as can home and mobile phones. Of course you will be paying your partner for running your office the maximum amount they can earn without paying tax (unless they also work, of course) and you may want to think about claiming the running costs of the part of the house you use as an office -- although you need to be careful, you might be responsible for Capital Gains Tax on that bit of house when you come to sell.

            RPSGB membership is tax deductible, of course, as is PDA membership and a good case can be made for BUPA membership also. And, of course, the tax treatment of pension contributions is magical although, be warned, some of my contemporaries have discovered that they have no control over their pension fund, the rate of return is derisory, and there may well be nothing to leave to your children.

            Taken all round, I averaged about three days work a week last year (with holidays in Australia, Ireland, and Colorado) and paid tax at an effective rate of just about 10%.

            all the way to the bank.

            Comment


            • #7
              Re: Locum rate calculations

              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),

              bout he TV license well my point about that was that if ure living independly with ur own house etc... then ur bound to have a tv and u'll have to pay the license so in effect this is a poll tax.

              about the allowances i did mention the tax deductable amount would be smaller after the various allowances, dono how ppl missed that

              but overall quite intreging to find that no one actually commented on my actual calcs e.g. how accurate they are, about the pay rate or hours worked a week, i wonder why this is, seems to hint at some form of secrative mindset

              im still a pre-reg and jus calculating this straight from basics. i hope people can atleast find it in their hearts to say either: yay or nay!!!!
              We are the music makers, We are the dreamers of dreams and God damn we are that good

              Comment


              • #8
                Re: Locum rate calculations

                Originally posted by SolomonQ View Post
                bout he TV license well my point about that was that if ure living independly with ur own house etc... then ur bound to have a tv and u'll have to pay the license so in effect this is a poll tax.
                No--it's a lifestyle choice to have a TV. No-one says you have to!

                Comment


                • #9
                  Re: Locum rate calculations

                  TV licence - whether it's a tax or not is irrelevant. If you want a TV you can pay for the licence or take your chances. Makes no difference to your income as a pharmacist locum. As is council tax - your employment status makes no difference to the amount you have to pay.


                  WRT rates you calculated - generally ok. Don't think anyone is intentionally having a secretive mindset. Personally I tend to get higher than £23 per hour but I now always incorporate a break into my working day (depends on local agreements whether break paid or not)

                  Have now started taking a definite break as seen a couple of pharmacists go through RPSGB fitness to practise investigation following a very simple mistake that was handled badly, and their entire working practice was looked at to the nth degree. Upshot was it looks better to RPSGB if you do take a break hence my change of practice in case I ever end up in similar situation.

                  So, overall I would take £23 as an average and base on a 8.5 hour day, and work on basis that any higher than that is just additional.

                  Your calculations miss out NI contributions as has already been pointed out and to just state that tax contribution would be less when fuel etc is considered is a bit simplistic as the variety of expense items you can claim can significantly reduce the tax you pay.

                  Also, whilst it is nice to factor in 6 weeks holiday many permanent positions only offer 5 so I would base your figures on this if you want to compare locum vs employed but base on 6 weeks if you want to predict what your income might be as a locum.
                  Titch

                  Comment


                  • #10
                    Re: Locum rate calculations

                    Originally posted by SolomonQ View Post
                    I like to be on top of my finances (habit from my uni days) because it helps me plan my future etc...
                    snip...
                    wat do people think of my numbers? are they reasonable?
                    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

                    Comment


                    • #11
                      Re: Locum rate calculations

                      Originally posted by SolomonQ View Post
                      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

                      Comment


                      • #12
                        Re: Locum rate calculations

                        Originally posted by Jeff View Post
                        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.
                        47 BC : Julius Cesar : Veni Vidi Vici : I came, I saw I conquered.
                        2018 AD : Modern Man : I shopped, I clicked, I collected.
                        How times change.

                        If you find you have read something that has upset or offended you an anyway please unread it at once.

                        Comment


                        • #13
                          Re: Locum rate calculations

                          Originally posted by Pharmanaut View Post
                          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

                          Comment


                          • #14
                            Re: Locum rate calculations

                            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?
                            We are the music makers, We are the dreamers of dreams and God damn we are that good

                            Comment


                            • #15
                              Re: Locum rate calculations

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

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