How will IR35 affect Doctors?
From April new legislation changes are being introduced from April 2017 which can affect the amount of tax and National Insurance locum agency workers pay. To find out more, or to see if you are affected see our FAQ’s below:
- What is IR35?
IR35 is also known as ‘intermediaries’ legislation’. It’s a set of rules that affect your tax and National Insurance contributions if you’re a candidate working for a client through an intermediary.
- What happens from April 2017?
IR35 rules were introduced back in April 2000, however HMRC has estimated only 10% of workers who should apply IR35 actually do so. To tackle the widespread non-compliance they are changing where the responsibility for applying these rules lies. The new rules will see the responsibility now lie with the body paying the fee of that intermediary worker.
- Does this affect me?
You will be affected, and need to take action if any of the following apply;
- You are paid gross as a self employed worker
- You work through your own personal service company (PSC)
- You are paid through an umbrella company
- When will these new changes come into effect?
Whilst the legislation is still in draft format there may be some changes, however HMRC are proposing the Intermediaries Legislation will take effect from 6th April 2017.
- Who decides if IR35 applies?
Up until now it has been up to the intermediary worker to provide evidence of whether IR35 applies, however from April 2017 the decision will now rest with the public body (i.e. NHS Trust) where you are contracted to work.
- What happens if I don’t agree with my status decision from the public sector client?
We recommend you use the government online test to check your status (this will be available at the end of Feb) if this confirms your role falls outside you will need to contact the public sector client directly.
- What is my current IR35 status?
Up until 6/4/17 this decision is yours, we suggest you speak to your accountant regarding this.
- Another agency has said this doesn’t affect them and will pay me gross?
This is law and will affect any locum working for the public sector, by not adhering to this you would be leaving yourself open to risk with HMRC.
- How will this affect my pay rate?
HCL will be liable for the employer’s NI contribution which is currently part of your rate. After 6 April, your limited company rate will be reduced by this amount as HCL will pay this to HMRC on your behalf.
- Will I take home less?
We suggest you speak to your accountant regarding this as it will depend on your current status and individual tax position.
- Will this affect my timesheet before 6th April?
It is important that you advise us of how you wish to be paid by 31 March 2017. If you wish to continue to work via your PSC, please return this form to us by 31 March.
- What do I need to do to continue to be paid via my PSC?
You will need to provide HCL with your National insurance number and valid tax code.
- Do I have to change how I’m paid? Can I work DE via other payment methods?
No, you can continue to work via your PSC; however PAYE and NI will be deducted before payment is made to your business bank account. DE will not make any difference – you should continue to work through this as it helps the trust save money. HCL will also have a PAYE option and most likely an Umbrella option also.
- What should I do?
If you are not being paid currently via PAYE then you will need to speak to your Accountant or umbrella company as they are in the best position to understand your particular situation, and how you will therefore be impacted.
- What if I don’t follow the new IR35 rules?
This is law and will affect any locum working for the public sector. By not adhering to this you would be leaving yourself open to risk with HMRC.
There can be significant consequences if you, your agency, or client ignores IR35 legislation. Interest and penalties can be charged on any extra tax and National Insurance contributions that are owed. Penalties can be more severe if it can be proved that IR35 rules or legislation have been deliberately ignored.
- Can I still work for the NHS?
Yes – these changes are just to tax legislation and have no bearing on your ability to work for any client/employer. There can be significant consequences if you, your agency, or client ignores IR35 legislation. Interest and penalties can be charged on any extra tax and National Insurance contributions that are owed. Penalties can be more severe if it can be proved that IR35 rules or legislation have been deliberately ignored.
- Who can I contact if I have any questions?
If you are a candidate with HCL Doctors, you can contact your consultant or phone us on: 08450 613 613. If not, you can contact your accountant or umbrella company.