IR35 for locum healthcare professionals
Plain-English guide to the off-payroll working rules for UK locum doctors, pharmacists, nurses and allied health.
Important
This is general information, not tax advice. IR35 status is fact-specific and depends on the written contract and the working reality. Get a written contract review from an IR35 specialist before accepting any engagement where the status is unclear.
What IR35 is, in one paragraph
IR35 is the shorthand for the off-payroll working rules in UK tax law. It applies when someone works through an intermediary, usually a personal service company, but would, looking at the reality of the engagement, be treated as an employee of the end client if the intermediary did not exist.
Who the rules affect
Coverage in practice
Sole traders are usually outside IR35. Limited company locums working for medium or large end clients may be inside or outside depending on the status determination statement. Umbrella-company locums are already on PAYE, so IR35 is not the live issue.
The three main status tests
Control
Who decides how, when, and where the work happens?
Mutuality of obligation
Is the client obliged to offer work and the worker obliged to accept it?
Personal service
Can the worker send a competent substitute if they cannot make a session?
What to do before accepting a booking
- Ask the end client for their size classification.
- If inside IR35 or if they refuse to say, get a specialist contract review.
- For long-running arrangements, review the working reality annually.
- Keep written evidence of substitution rights, session-by-session pricing, and control over how you work.
Frequently asked questions
Does IR35 apply to self-employed locums invoicing as sole traders?
No. The off-payroll working rules, commonly called IR35, only apply when an individual works through an intermediary. A self-employed locum GP or pharmacist invoicing an organisation or pharmacy directly as a sole trader falls outside the rules entirely. HMRC may still look at employment status under the general employed versus self-employed tests, but that is a different regime.
What changed in April 2021?
Responsibility for determining employment status for tax shifted from the worker company to the end client when the end client is a medium or large organisation. All NHS trusts, most NHS practices, and large private hospitals are in scope. That means the trust or practice decides whether you are inside IR35 and, if so, must deduct PAYE and NI as if you were an employee before paying your company.
Inside versus outside IR35. What is the practical difference?
Outside IR35 means the engagement is treated as a genuine business-to-business contract. The worker pays corporation tax on company profits, can draw a low salary plus dividends, and retains control over tax planning. Inside IR35 means the end client or fee payer deducts PAYE and employee NI from the invoice before paying the company. The worker keeps the company for admin purposes but loses most of the tax efficiency of operating through a PSC.
What factors make a locum engagement inside IR35?
The main tests are control, mutuality of obligation, and personal service. If the practice dictates how, where, and when you work; if you must accept offered sessions; and if you must do the work personally without the right to send a substitute, those point to inside IR35. If you set your own days, bring your own equipment, invoice per session, and have a contract that permits substitution, those point to outside.
Is a locum GP through a primary care practice inside or outside IR35?
Most single-session locum GP work at GP practices is outside IR35 when the GP works as a sole trader. When working through a limited company into an NHS-contracted practice or PCN, the practice is usually a small company for IR35 purposes, meaning responsibility remains with the GP company. However, larger GP federations and out-of-hours providers may be medium sized, pushing the determination to them. Always check the status determination statement you receive.
How does IR35 affect agency locums?
If you work through an agency that pays you through an umbrella company, PAYE is already deducted and IR35 is not the relevant regime. If the agency pays your limited company, the end client still issues the status determination statement and the agency acts as the fee payer responsible for deductions when inside. Always ask for the statement before accepting the booking.
What do I do if I disagree with an inside-IR35 determination?
You have a statutory right to appeal. Write to the end client within 45 days of receiving the status determination statement and set out which factors you dispute. They must respond within 45 days with a reasoned decision. If unresolved, you can take the dispute through HMRC, a contract review with an IR35 specialist, or ultimately a tax tribunal.
Does IR35 apply to locum nurses and allied health professionals?
Yes, on the same basis as doctors and pharmacists. The rules are profession-neutral. What matters is whether you work through an intermediary and whether the end client is a medium or large organisation. Most bank nursing goes through umbrella or agency PAYE, so IR35 rarely bites.
Should I form a limited company as a locum?
It depends. If you earn above roughly 60,000 pounds gross, are mostly outside IR35 in practice, and can leave profits in the company for tax-efficient future drawdown, a limited company can save tax. If most of your work is inside IR35, or your earnings are modest, the sole trader route is usually simpler. Talk to a medical-specialist accountant before deciding.