We don’t think so. In fact, we would be glad to publish any reasoning from any umbrella company as to why a locum would want to use an umbrella company to get paid.
Look at the facts. Assuming you do 20 weeks in a year at a rate of £1,000 a week, your annual income is going to be £20,000.
Your tax on this as a self-employed person is going to be negligible. The first £10k’ish is tax-free, and the remainder is done at 20%. Your national insurance contributions will be minimal and you can knock off plenty of expenses before getting taxed – speak to an accountant about the expenses to be deducted – low-cost accountancy at www.businessbusstop.com if you are looking for one!
An umbrella company sets you up as a limited company and handles all your administration.
Gee whizz! What administration? Issuing weekly invoices, submitting an annual self-assessment to HMRC and paying your national insurance and income tax? It is hardly very taxing.
The umbrella company takes a fee from your hard-earned locum monies for work you could quite comfortably do yourself.
We have only come across one locum using an umbrella company for a very long time in recruitment. In that instance, I don’t think the locum got any benefit at all. Completely pointless.
If anyone knows of a reason to justify the use of one of these companies apart from laziness, please let us know and we’ll publish it on our site.