IR35 changes for GP locums with Ltd companies

From the 6th of April, a legislative change is coming into force that will affect all Locum GPs working through their own limited companies.


In 1999 Gordon Brown announced measures to counter tax avoidance by contract workers working through  limited companies. Prior to the legislation, referred to as IR35, contract workers who were indistinguishable from employees with respect to the way they worked were able to pay less tax compared to on-payroll workers doing the same job. Under the IR35 rules, the amount earned by the limited company from the contract is deemed to be the worker’s salary and subject to NIC and PAYE accordingly, bringing these worker’s tax liability inline with on-payroll workers.


Currently the limited company is responsible for applying the IR35 rules. However from April 6th, the responsibility is shifting from the limited company to the public sector body engaging the worker or agency (where there is one.)

In practical terms locums working through limited companies on contracts that are subject to IR35 rules will now be taxed at source for NIC and income tax in the same way as a salaried employee. The locum’s limited company will receive the net amount after taxes.

Download Our Locum Guide to IR35

Clarifications – Does the public sector definition include GP practices?

Although GP practices are private partnerships they receive public funds and are considered public sector bodies for the purpose of this legislation. The legislation makes use of the Freedom of Information Act definition of public sector which includes GP surgeries. I have also received confirmation of this directly from the HMRC IR35 policy team. This may change, but as of today GP practices are included.

Are GP locum contracts caught by IR35 rules?

The underlying spirit of the IR35 rule is intended to establish if the day to day work of a contractor is not materially different from those of a salaried employee.

Confusion arises when the decision making criteria is incorrectly applied to working as a locum in general, and not to a specific contract. For example, one of the questions used to determine scope is; “does the worker have the right to choose when and where to work, and to refuse work”. Many locums answer instinctively that of course the do. In fact that’s the definition of a locum, you can pick your jobs and work when you want. So they are not in scope. This however is a fallacy. The question relates to the contract, and should be read, “in the context of the contract do you have the right to decide when and where to work?” Clearly not, if you accept a contract you can’t choose to work from home or deliver your GP services at hours you choose.

The length of the contract is not a factor here, it’s the work itself, not how long or short the engagement. So even ad hoc sessions will be in scope if the work undertaken in those sessions is materially the same as work undertaken by on-payroll GPs.

Under the new rules coming into force in April it will be the practice’s responsibility to determine if a contract is caught by the IR35 definition. The legislation includes provisions for financial penalties if practices fail to identify IR35 contracts therefore a conservative approach is expected.

Considerations for Locums

How this impacts locums will depend on whether or not they are correctly applying the IR35 rules today. If a locum isn’t correctly applying the IR35 rules to their limited company today, they will find themselves paying more tax after the 6th of April. Of course this change has been brought to combat perceived non-compliance of the IR35 rules and so in many cases locums will find that the new rules have the effect of reducing their take home pay. If a locum was previously non-compliant they will now be made compliant, and will pay more tax as a result.

On the positive side this change will reduce administration for locums who choose to work through limited companies as they will no longer have to administer the IR35 rules, calculate tax and pay this to HMRC.

Download Our Locum Guide to IR35

Derek Charter

Derek is consulting at Network Locum

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Dr. Susan Berry

Another nail in the coffin for the NHS!! These changes are unbelievable considering rising indemnity fees etc etc. I am a GP of over 30 yrs experience and still love the practice of Medicine after all these years. Up until now, I have been a happy locums and have a limited company. I will absolutely not tolerate these changes in the tax law and am seriously considering quitting the profession. Annual appraisals, revalidation, rising patient expectations and complaints, increased negligence claims…. comes a point where it is just not worth it!!!

February 23, 2017 at 10:26 pm Reply

    Dr Owen

    I 100% agree with you. It’s disgusting how much things have changed. I guarantee we will see a massive brain drain. I personally know so many doctors move to Middle East and Australia.

    February 24, 2017 at 9:02 pm

Dr Amir

You mention in your blog that GP’s with limited companies will be taxed at source, which I agree with. However GP’s working as sole traders will also be taxed at source, not just the limited companies. The reason for this is that if Doctors fail the IR35 rules, it is because they are not truly self employed. Therefore, if we are not truly self employed as GP logins, then even if we work as sole traders we will still be taxed at source, and not paid gross.

February 24, 2017 at 10:30 am Reply

Yaser Javed

The when and where portion doesn’t make sense to me. If I ask a plumber to come to my home at 3pm because that’s when I’ll be home I’m also adding those conditions but I’m sure nobody would argue theyre my employee.

February 27, 2017 at 1:17 pm Reply

    Salman cheema

    Very good point. Also how can the locums be considered employees as they don’t get paid if sick , no maternity , paternity or annual leave. A total nonsense employ same rules. People should have the freedom to get a post as employed and have extra security at the expense of paying more tax or to work as a freelance , without above mentioned securities with some advantage interms of claiming work related expenses etc. Not sure why they don’t like it?

    March 26, 2017 at 6:51 pm

Dr Amir

I agree with you all that this is very unfair, but the sad reality is that there will be no brain drain. Yes a few may jump ship to another country or leave medicine all together, but the vast majority will just accept it and carry on, as there is no choice, just like the imposition of the contract on junior Doctors, no amount of strikes made any difference. Also you must remember that this not only affects Doctors, these changes will affects all contractors and buisness owners who work in the public sector. Your average Tom Dick and Harry already thinks that buisness owners and GPs are overpaid and useless, so no one wil support us.

Unfortunately there is very little we can do, and Austerity is finally biting us as well.

February 28, 2017 at 8:58 am Reply


This was going to happen sooner or later with Brexit and the huge government borrowing. The govt appears to try and grab as much as possible from hard working GPs, consultants and juniors.
I see two outcomes:
1. There will be a huge short fall of good doctors in the NHS: trusts will struggle to fill up posts in acute medicine and various specialities.
2. Doctors working through locum agency may only agree to contract at a higher rate to off set NI contributions of 12.5 percent.
3. Larger numbers may go abroad will the tax free salary provided by Gulf states and the numerous other benefits.
So who loses in the end? The NHS and HMRCs absurd policies.

March 12, 2017 at 11:15 am Reply

Dr. Ben Desouza

I think there is an inherent problem with the way rules are defined within the IR35. They are so loosely defined rules make it extremely difficult to interpret some jobs/consultancy and locum work, and whether they fall outside or within the IR35. My two pence worth of advice is to speak to accountants who can provide clever alternatives. There are alternative methods, and one such is advertised by the likes of locum pay plus. I do not know the details of how the IR35 would affect their strategy, but they claim that your take home pay can be upto 90% instead of 72% via a limited company. Maybe a fellow blog reader here has some experience with them?

March 12, 2017 at 7:41 pm Reply


So I take it that PAYE locums are not affected and the rules for them remain the same – annual self assessment? Thanks.

March 14, 2017 at 12:50 am Reply

    Derek Charter

    Depends what you mean by “PAYE Locum”. This change in April is only affecting contractors who operate via their own limited company (or other PSC). Locums who operate as sole traders or are self-employed will still operate as before and complete a self-assessment at the end of the year, and not PAYE.

    March 29, 2017 at 12:11 pm

Dr Raman Prabu

I am a GP partner – struggling with costs of Locums for a few years.
This is welcoming news for practices as many but not all Locum have been fleecing practices with high fees. The reality is many Locums earn far more then a GP Partner for much less responsibility. This makes it fair.
But then you may ask why don’t I quit but if all GP partners quit all the GP’s will be salaried and then we won’t even get paid what you will get paid even with these rules being applied as big companies will have the contracts and determine pay.
Best all GP’s return to traditional partnerships.

April 20, 2017 at 8:35 am Reply

    Dr Clowes

    I’m not sure why you see this as “welcome news”. As an employer of locums you will now be stuck with employer’s NI unless you expect to pass that on to your locum. If you do that you may not have a locum to employ at all.

    May 5, 2017 at 8:11 pm