IR35 and Locum GPs: What You Actually Need to Know

IR35 is one of the most misunderstood areas of tax for self-employed doctors. Here is a clear explanation of what it is, how it applies to most NHS locum GPs, and what to watch for.

What Is IR35?

IR35 is a set of tax rules designed to prevent workers from using a Ltd company (or other intermediary) to avoid employment taxes. HMRC’s concern is the “disguised employee” — someone who is effectively working as an employee but routing their pay through a company to pay lower dividends tax instead of PAYE income tax and NI.

When a worker is found to be inside IR35, their income is treated as employment income for tax purposes — even if it is paid to their company. They lose the tax advantages of the Ltd company structure entirely and effectively pay employment-level tax and NI.

The Off-Payroll Working Rules (Since April 2021)

Since April 2021, the responsibility for determining IR35 status shifted to the client organisation (the “end client” who receives the work), not the worker or their company. This applies to medium and large private sector organisations and all public sector bodies.

For NHS locum GPs, this matters directly: NHS bodies are public sector clients. Since April 2017 (public sector) and April 2021 (private sector rollout), NHS practices and health boards are responsible for determining your IR35 status — not you or your agency.

How IR35 Applies to Most NHS Locum GPs

Direct engagement (NHS practice to locum)

If you work directly for an NHS GP practice — they book you, you invoice them, and there is no agency in between — the practice determines your status.

The practical reality for most GP locums: NHS GP practices providing GMS/PMS services typically engage locums in a way that falls outside IR35. Locum GPs generally:

• Provide their own professional judgment
• Are not integrated into the practice’s management structure
• Often work for multiple practices
• Bear professional risk and hold their own indemnity
• Can substitute a different GP in many circumstances

These are factors that point toward outside IR35 status. However, each engagement should be assessed individually — there is no blanket rule.

Agency locums

If you work through an agency (the agency contracts with the practice and pays you), the situation is more nuanced:

1. The agency must provide you with a Status Determination Statement (SDS) — a document stating whether you are inside or outside IR35 and the reasoning behind it
2. If inside IR35, the agency deducts income tax and NI via PAYE before paying you — your Ltd company receives net pay, not gross
3. If outside IR35, you continue to receive gross pay and manage your own tax

Always ask your agency for their SDS before accepting an engagement through a Ltd company.

What Happens If You’re Inside IR35?

If a determination places you inside IR35:

• Your Ltd company income from that engagement is treated as employment income
• The client (or agency) withholds income tax and employee NI via PAYE
• Your Ltd company receives net pay — the tax benefit of paying yourself in dividends disappears for that income
• The corporation tax treatment changes — IR35 “deemed payments” attract employer NI

In practice, being inside IR35 for NHS work and operating via a Ltd company is rarely advantageous. Most locums in that position are better served as sole traders — simpler, less admin, equivalent take-home.

Sole Traders and IR35

IR35 does not apply to sole traders. The rules specifically target workers using an intermediary company (Ltd company, umbrella company, etc.). If you work as a self-employed sole trader and invoice practices directly, IR35 is not relevant to your situation.

Key Questions to Ask

1. Am I working through a Ltd company? If no → IR35 does not apply. If yes → read on.
2. Am I working through an agency? If yes → ask for the Status Determination Statement before starting.
3. Is the client an NHS body? If yes → they have been responsible for status determination since April 2017.
4. Does my engagement letter/contract reflect genuine self-employment? Contracts that include a right of substitution, no obligation of personal service, and no integration into the client’s hierarchy are more likely to be outside IR35.

Practical Summary for Most Locum GPs

Situation	IR35 status
Sole trader, direct NHS engagement	IR35 does not apply
Sole trader, agency engagement	IR35 does not apply
Ltd company, direct NHS engagement	NHS practice determines status; most GP locum roles are outside IR35
Ltd company, agency engagement	Agency determines status; request the SDS
Inside IR35 via Ltd company	Tax advantage of Ltd structure is lost; consider reverting to sole trader

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This is general information, not legal or tax advice. If you work through a Ltd company, have your contracts reviewed by an IR35-specialist adviser and request a Status Determination Statement from every client or agency you work with.