If you are working as a locum doctor, you may have experienced this moment before.
You finish a long shift, submit your timesheets, and when the payment comes through you look at your payslip and think:
“Where did all my money go?”
Many locums work through agencies or hospitals that deduct tax according to standard tax tables. While this ensures that taxes are paid, it is often not the most tax-efficient structure for independent professionals.
The reality is that many locums are unknowingly paying more tax than necessary simply because they have not been shown the alternatives.
The Most Common Structure: Trading in Your Own Name
Most locums operate in their personal capacity. This means:
• Your timesheets or invoices are submitted in your own name
• The agency deducts tax using PAYE tables
• There is little or no tax planning involved
Personal income tax rates in South Africa range from 18% to 45%.
As your income increases, so does your tax rate. Without proper planning, this can result in a significant portion of your earnings going to tax.
Many locums follow this route not because it is the best option, but because they have never been empowered with the right financial information.
An Alternative Many Locums Don’t Know About
A lesser-known option is operating through your own company.
Yes — locums can have their own company.
To comply with HPCSA regulations, this would typically be structured as a Personal Liability Company (Inc.).
Under this structure:
• Your company invoices the hospital or agency
• The company receives the gross payment
• You gain greater control over your tax planning
Potential Tax Advantages
Companies in South Africa are taxed at 27% on profits.
In addition, qualifying small businesses may benefit from Section 12E of the Income Tax Act, which provides graduated tax rates.
In some cases, the first R95,750 of profit may not be taxed under the Small Business Corporation framework.
This structure can create meaningful tax efficiencies compared to personal tax rates, depending on your situation.
It’s Not Only About Tax
Having the right structure also allows you to:
• Plan your finances more effectively
• Professionalise your operations
• Build a structure that can later support your own medical practice
In other words, the same company you use for locum work today can grow with your career tomorrow.
Many Locums Simply Don’t Know Their Options
Over the years, we have worked with many medical professionals who were never informed that they could structure their work differently.
They simply accepted what agencies deducted, without realising there were better ways to manage their financial affairs.
Education and proper structuring can make a significant difference over time.
If You Are a Locum, It May Be Worth a Conversation
At FullServe Chartered Accountants, we assist doctors and healthcare professionals with:
• Structuring their locum income correctly
• Tax planning and compliance
• Building sustainable financial structures for future practice ownership
If you would like to explore whether your current structure is the most efficient for you, feel free to reach out.
077 260 1004
info@fullserv.co.za
Sometimes a simple structural change can make a significant difference over time.
FROM SCRUBS TO SARS WE HAVE YOU COVERED