U-turn on 'chaotic' IR35 rules to prevent locum tax hikes

The BMA has welcomed NHS Improvement's decision to reverse its 'disastrous' advice on IR35 tax forms that would have 'significantly penalised' GP locums and increased their costs.

NHS Improvement has reversed advice calling for GP practices to take a blanket approach on IR35 forms when contracting locums following changes to tax rules in April.

It has now advised practices to carry out a case-by-case assessment of whether IR35 applies when employing locums, a move welcomed by the BMA.

The IR35 is intended to prevent ‘disguised employment’ – a form of tax avoidance where a worker acts as an employee but receives payments through an intermediary instead of directly to make significant tax savings.

GP locum tax

Historically, locums – who often work for practices through intermediaries such as agencies or set up their own companies – could decide for themselves whether IR35 rules applied to them.

The changes that took effect from April put this decision instead in the hands of practices that employ them, meaning they would also be responsible for deducting tax on locum earnings.

The BMA said the move would have ‘significantly penalised’ GP locums. GPC sessional committee chair Dr Zoe Norris said in a blog there had been ‘huge amounts of confusion’ in the wake of the IR35 changes.

The National Association of Sessional GPs warned that locums would have to conduct extra negotiations for each and every contract because of the changes.

GP earnings

It added that, as practices would deduct tax from locums’ earnings rather than locums themselves, they would face larger deductions and miss out on more take-home pay.

Following the U-turn, NHS Improvement advises practices to decide whether IR35 rules apply on a case-by-case basis.

A BMA spokesman said: ‘This is a significant and positive step forward in response to BMA pressure following the chaotic introduction of the IR35 rules. This change significantly penalised locums in general practice and in hospitals. It was administratively a disaster for the NHS.

‘We are pleased that NHS Improvement has finally listened to grassroots GPs, hospital doctors and the BMA by dropping its unworkable blanket approach to this policy. The NHS should now do more to show that it values the essential role locum doctors play in ensuring patients get good care on a daily basis.’

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