If you are a locum healthcare worker, the recently announced government plan as part of the Autumn 2022 mini budget to abolish the off-payroll IR35 reforms could be good news. This once again means, it will be either you or your locum agency, rather than your employer, who’s in control of determining your employment status. In his mini-budget on 22 September, the new Chancellor Kwasi Kwarteng announced that the IR35 reforms first introduced in 2017 and reformed in 2021 would be repealed from April 2023. What does this mean for those working in locum healthcare roles in the NHS or for a private provider?

Here’s our explainer…

What is IR35?

Also known as ‘off-payroll working rules’ IR35 is tax legislation that applies to those workers who supply their services as an independent contractor via a personal services company or agency hence. If you are deemed to be outside of IR35 legislation, there are some advantages of working in this way, including savings on national insurance payments.

What are the IR35 reforms?

In 2017, radical change happened public authorities became responsible for deciding if the rules applied where they contracted workers through a personal services company or agency. This meant that many of those working in locum NHS jobs, including doctors, nurses, social workers, psychiatrists, radiographers and other allied health professionals, would have their IR35 status decided by their employer, rather than by themselves or their locum agency. In 2021, the off-payroll working rules were further amended , extending the responsibility for deciding the worker & employment status to medium and large private sector companies, including independent healthcare providers. These reforms have had the controversial effect of making some employers cautious about taking on contractors on a self-employed or agency basis, with many opting to employ them on a PAYE basis instead.

What’s changing?

The Chancellor has sweepingly committed to fully reversing the IR35 reforms in both the public and private sectors from 6 April 2023. “From this date, workers providing their services via an intermediary will once again be responsible for determining their employment status, and paying the appropriate amount of tax and National Insurance contributions, & he said in his Growth Plan 2022. “This will free up time and money for businesses that engage contractors, that could be put towards other priorities.”

How will the change affect healthcare locums?

NHS Trusts, Health Boards and private healthcare providers are currently responsible for informing locum agencies and workers if their role falls inside or outside of IR35 legislation. Assuming the repeal process proceeds as planned, this responsibility will transfer to those locum agencies and workers from April 2023.

Will the repeal of IR35 reforms definitely happen?

It will require brand new legislation (in the form of a Finance Bill), so nothing can be taken for granted until it actually passes and it’s worth remembering that new legislation can be delayed through unexpected circumstances. The 2021 reform was originally planned for 2020, but delayed until 2021, primarily because of the COVID-19 pandemic. However, the repeal of the reforms seems to have widespread support and, with a fair wind, should progress fairly smoothly.