IR35/Off-payroll: What do you need to know?


Medical, Recruitment, GPs...

As we’re sure you’re aware the government has recently confirmed changes to legislation from April 2017 called Off-payroll or IR35.

We would like to take this opportunity to help our Doctors and Nurses fully understand how this legislation affects you and what actions you need to take.

If you have any questions or queries at all regarding IR35 please get in touch as soon as possible and we’ll be happy to discuss your situation.

You can request a call-back about IR35 by clicking here, or register your interest in our sessions outside of IR35 by clicking here.


What is IR35?

The legislation is intended to stop “disguised employment”, where employers engage employees through limited companies thus avoiding the need to pay Employer’s National Insurance contributions, Sick Pay, and Holiday Entitlement, with the disguised employee also potentially able to benefit from a reduced tax bill.

For IR35 to apply, HMRC has to deem the relationship between the contractor and their client to be an employer-employee relationship by referring to a number of complex and subjective tests established in case law. These tests are unclear, leaving uncertainty who is and who is not in the scope of the IR35 rules.

It is the responsibility of the public sector end client to determine the IR35 status of an engagement.

Where IR35 status does apply, it dictates that liability is on the organisation that engages you to work in the public sector (Recruitment Agency or NHS). These organisations will now be responsible for paying your Tax and National Insurance contributions.

IR35 legislation takes effect from 6th April 2017.


What does IR35 mean for you?

If you are currently working and invoicing through your own limited company, the way you are paid may need to change.

Under the new legislation, the following will apply:

  • If an engagement is deemed to fall within IR35; no agency or public sector department (NHS) will be able to pay the gross invoice value to your limited company.
  • If an engagement is deemed to fall within IR35; the NHS will not directly engage temporary staff who operate under a Personal Service Company (PSC) or own Limited Company.

In such cases, the NHS will not allow agencies to supply temporary staff who operate under a PSC or Limited Company.

How this affects you will be dependent on how the end client determines their IR35 status of engagement. We are actively contacting all end clients to determine their status. Many clients so far have indicated that they deem themselves outside of IR35, meaning that you may be able to continue supplying your services via a PSC or own Limited Company.

If you are currently paid via PAYE then you will not be affected and you will be able to continue working as you currently do.

If you would like to discuss your situation or find out about our sessions which fall outside of IR35 please don’t hesitate to get in touch or request a call.

What are your payment options?

In order to continue working as a temporary worker for public sector clients within IR35 you will need to:

  • Be employed by the agency and have PAYE and NI deducted at source on all payments (at existing PAYE rates)
  • Be part of a fully compliant Umbrella arrangement,  where the agency pays your Umbrella Company gross pay (at existing Company rates). The Umbrella Company will then make the appropriate PAYE and NI deductions and remit the net earnings to you, the temporary staff.

We have spent a great deal of time reviewing IR35 and its impact on our Doctors and Nurses. In response, we have consulted numerous experts and Umbrella Companies in order to provide you with the best options. Please get in touch to discuss our Umbrella partners.

As discussed above, there is a chance you may be able to continue working within a Limited company should the end client fall outside of IR35. Contact us to find out about sessions outside of IR35 which may apply to you.


What are the next steps?

We understand that this is a difficult situation for everyone involved. Eligo Medical will do everything they can to keep things as easy and simple as possible for you.

We recommend that you:

  • Consider your options carefully
  • Get in touch with us if you are unsure whether your work will fall in or out of IR35
  • Let us know which of the payroll options will apply to you once the legislation begins

If you have any questions or queries at all regarding IR35 please get in touch as soon as possible. We’re here to help. 

Interested in finding out about our sessions outside of IR35? Click here to request a call back to discuss.