Locum Pharmacists: What Can You Expect in the New Tax Year?

Are you a locum pharmacist? Now's the right time to think about the issues set to impact you in the 2022/23 tax year. Take a look…

Personal Tax Planning

Take control of your tax planning in 2022. If you’re a locum working through your limited company, you have dividends to think about.

Make sure they’re taxed at 7.5% instead of at 32.5% – those are massive savings! You can talk to us and we’ll help you figure it all out.

In the meantime, it’s good to be aware of the dividend tax rates and how you can maximise your personal allowance.

For 2020/21 and 2021/22, they are:

• £12,570 – personal allowance that is tax-free
• £12,571 to £50,270 – basic rate at 7.5% 
• £50,271 to £150,000 – higher rate at 32.5%
• £150,001+ – additional rate at 38.1%

in addition to the tax free personal allowance, each individual has a tax free dividend allowance of £2,000.

In 2022/23, the dividend tax rates will increase by 1.25% within each tax band:

• £12,570 – personal allowance that is tax-free
• £12,571 to £50,270 – basic rate at 8.75% 
• £50,271 to £150,000 – higher rate at 33.75%
• £150,001+ – additional rate at 39.35%

New Year, New Accountant

Take the tax year end opportunity to also switch accountants if you’re not entirely happy with your current situation. There are many reasons to change accountants, and you can rest assured that, at Gorilla, the process is simple, quick and hassle-free.

Switching accountants can offer you several benefits, including lower fees, a dedicated accountant who’s also an expert in your sector, error-free accounting, and so much more.

National Insurance

Did you know that National Insurance rates will increase from April 2022 by 1.25% for both employees and employers? In addition, Class 4 National Insurance, which you must pay as a locum pharmacist, will increase as well, so it pays to be ready for the upcoming changes.

One way to offset this may be to raise your rates…

Making Tax Digital

From April 2022, VAT-registered business with a turnover below £85,000 will also have to file returns via software that is compliant with Making Tax Digital, such as FreeAgent bookkeeping software.

After April 2024, self-employed businesses must comply with Making Tax Digital for Income Tax and, after April 2026, the same will happen with corporation tax, but you still have time to prepare for that!

Annual Staff Events

As a locum pharmacist, you may want to hold staff events throughout the year; for example, to celebrate your staff. If this is the case, you’ll be happy to know that employees and guests can attend and there is a tax-free limit of £150 per head. You can have more than one event per tax year as long as you don’t exceed the £150 limit.

Self-Assessment Deadline

As a special consideration, HMRC has postponed the deadline for the self-assessment submission by one month, so that people have more time to complete their forms and pay any taxes they owe.

So, if you’re worried about submitting your 2020/21 tax return on time, you now have until 28 February 2022 to do it without incurring penalties.

Crypto Assets

If you have any cryptocurrency assets, you must:

Declare any gains you make after selling them

Pay tax on them, such as Capital Gains Tax

Consider the way you acquire the crypto assets, since this will dictate the tax treatment

However, this is still a grey area and guidance continues to evolve just as the sector does. Speak to us for more information about your particular situation.

IR35

While people continue to be – rightfully – concerned about off-payroll rules, companies are now happier to engage with locums outside of IR35, instead of simply applying a blanket ban on all contractors.

You may find that you get more gigs this new year, especially as demand for locums and contractors grow!

There are many things to consider in 2022 but leave it to us to help you maximise your tax efficiency and grow your business – we work with a range of clients, including locum pharmacists, so we know everything there is to know about your industry and the rules and legislation that apply.

Send us an enquiry for more information and to see what we can do for you.