How to get paid as a locum doctor: Limited Companies versus Umbrella Companies

Not sure how to size up the best option available for you? Here are our pros and cons to help you make up your mind.

Limited Companies

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Advantages Disadvantages
Most tax efficient way of working Administrative paperwork will have to be done
You can claim on a wider range of expenses It can be costly if you only locum for a short time before returning to permanent employment
You have complete control of your finances with no third party involved You will need to spend time setting up your company –  so deciding on company rules, etc
More opportunity for tax planning You will need to hire an accountant to help with your financial paperwork
Full control of paying yourself and dealing with invoices Responsibility of having your own limited company to run
Can use the flat rate VAT system  Review your contract for IR35
Faster processes as you have direct control  Full responsibility for unpaid or incorrect tax
Less paperwork involved than you may think  Full directors responsibility for all accounts and HMRC submissions
You have the final say on any and all business dealings – can adept if your circumstances change
Lower personal financial risk


Umbrella Companies

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Advantages Disadvantages
Very easy to use with full employment rights and the opportunity to maximise your take home pay and claim any legitimately incurred expenses A potentially expensive way of working as still subject to full tax and NI liabilities after the reimbursement of all legitimately incurred business expenses
Tax and NI is deducted before you are paid so you don’t need to worry about it Reliant on a third party to collect your wages or salary, but this could also be considered an advantage as it takes the hassle away from you
Ideal for all placements, but you must work for more than one client May take a percentage of your earnings as well as charge for their services
No heavy paperwork involved Don’t take home as much income
Instant and straight forward set-up process with no worries about IR35


What to consider when making your choice?

  • How important is it to control the company?
  • What element of control will you be under on any given assignment?
  • Presentation / Status – do you want to introduce yourself as owning a limited company?
  • What is your attitude to administrative work / duties?
  • Length of contracting – short or long term?
  • Contacting RACS Group – they exclusively provide a fully independent assessment of your personal circumstances to assess which payroll solution best suits you via their Best Advice Matrix (BAM)

Undecided? You could always start out by working for an umbrella company and then make the move to having your own limited company afterwards if you wish. It is much easier to move from an umbrella company to limited company than the other way round, as you won’t need to dissolve your company.

There isn’t a right or wrong choice; it’s all about picking what will work best for you. Feel free to contact us if you would like some more advice.

[testimonial name=”By Craig Knox” who=”Finance Director” imagelinks=”” vertical=”no”]”At Total Assist we aim to provide a market leading payment process that results you receiving your pay as quickly as possible.  To help us achieve this please follow our guide on how to submit your timesheets.”[/testimonial]


Financial information provided by RACS Group, one of our preferred umbrella suppliers.

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