IR35 reforms repeal – what does it mean for you?
By Gemma Raw
Update - repeal of IR35 Reforms were scrapped by Jeremy Hunt on 17th October 2022.
If you're a locum healthcare worker, the government's plan to abolish the off-payroll IR35 reforms could be good news. Once again, it will be you or your locum agency, rather than your employer, who's in control of your employment status.
In his mini-budget on 22 September, Chancellor Kwasi Kwarteng announced that the IR35 reforms introduced in 2017 and 2021 would be repealed from April 2023.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 the '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. If you're deemed to be outside IR35, there are advantages of working in this way, including savings on national insurance payments.
What are the IR35 reforms?
In 2017, 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, 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 amended again, extending the responsibility for deciding the worker's employment status to medium and large private companies, including independent healthcare providers.
These reforms have had the 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 committed to 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 new legislation (in the form of a Finance Bill), so nothing can be taken for granted 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, mainly because of the COVID-19 pandemic. However, the repeal of the reforms seems to have widespread support and, with a fair wind, should progress smoothly.
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