By Dr Surina Chibber



Here at we have been inundated with your questions about the upcoming tax changes being implemented in April that will affect locum GPs. Today our guest writers are BHP Chartered Accountants who have a team of specialist medical accountants that have answered the most commonly asked questions about the imminent tax changes. is also hosting a free webinar on the April tax changes which will include a free Q&A session with specialist medical accountants to help you prepare for the new legislation. To reserve your place for the free webinar sign up using the link below.

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Q. What is the new intermediary legislation being considered for April?

The new changes are an extension to the existing IR35 legislation. IR35 is also known as ‘intermediaries’ legislation’. It’s a set of rules that affect your tax and National Insurance if you’re contracted to work for a client through an intermediary. You may need to follow IR35 if you work for a client through an intermediary and if your work is indistinguishable from your salaried colleagues.

The intermediary can be:

  • your own limited company
  • a service or personal service company
  • a partnership

If IR35 applies, then the intermediary is subject to PAYE and National Insurance contributions on any salary or wages it pays to you during the tax year.

The rules are designed to make sure that the right rate of tax and National Insurance is paid for you.

Locum GPs working as a limited company will be subject to the new legislation which will affect the way they are paid and taxed.

From the 6th of April, GP practices who pay locum GPs ‘off- payroll’ through a limited company are responsible for deciding if the engagement between them and the limited company has the characteristics of an employment rather than self-employment. If so, then the GP Practice must deduct PAYE tax and employee’s national insurance contributions from the payment to be made to the locum. The GP practice must also pay employer’s national insurance contributions at 13.8% of the payment made.

If the work is arranged via an agency, the agency becomes liable for the employer’s national insurance contributions and for putting the payment through their own PAYE payroll but it is still down to GP Practice to decide if the engagement is caught by the new rules and if it is, to let the agency know.


Q. What impact could this have on Locum GPs in terms of how they invoice for work and get paid?

The main change being implemented in April is that the decision-making process is being removed from the Locum GP and instead placed with the GP practice.

The Locum GP will invoice as normal, through their limited company. It is up to the GP practice to decide if the work done falls under IR35 and is therefore subject to the PAYE tax and employee’s NICs deductions.

The Locum will get credit for the deduction of the tax and national insurance through their limited company and can take the net payment as salary or as a dividend without further tax deductions.

There are two main impacts:

  • The contract will be 13.8% more expensive for the payer which may push the payer into directly employing the contractor, and
  • The Locum GP working through a limited company will no longer be able to deduct 5% of the value of the contract before calculating the tax and NICs on the ’deemed payment’ as is the case with IR35.


 Q. I am a Locum GP working as a limited company, I am concerned about the new changes coming in April. Will my income be deducted by the practice before they pay me? 

Only if the work you undertake at the practice is deemed to be employment rather than self-employment then the new rules will mean that the practice will deduct PAYE tax and employee’s national insurance before payment is made.


Q. I am a Locum GP who works as a limited company, I'm concerned that because of these tax changes my income will drop and it would be better to switch back to being a sole trader. Is this true? 

Your income will drop only if the terms of the engagement are deemed to be employment because you will have employee’s national insurance deducted from that contract payment and you won’t be able to claim a 5% IR35 deduction in your company.  However, if you switch back to being a sole trader, and the terms of the engagement stay the same, the payer should put you onto their payroll anyway and you would still have employee’s national insurance deducted from your earnings.

If the contract is caught by the new rules, you may be better off as an employee of the client because you won’t have the expense of running a company.  However, if you have more than one contract in the year, and not all your contacts are all caught by the new rules, you may be better off keeping the company structure because it still gives you the flexibility to withdraw dividends for contracts outside of the new rules.

If your company is owned by your family, for example if your partner owns all the shares, but you are the worker, and a contract is caught by the new rules, you won’t be able to pay yourself a dividend for that contract. If you want to take the money out of your company, you’ll have to take it as salary but you won’t have to pay tax on it again.


Q. I am a Locum GP working as a sole trader, if these tax changes are implemented what does this mean for me? 

Although the tax changes relate purely to limited companies and will not affect sole traders, that doesn’t mean that sole traders can be paid on an invoice without some consideration of their employment status. If the IR35 rules apply to you, your NIC and PAYE deductions will also be made at source.


Q. I am a GP partner. Our practice employs Locum GPs. How will these tax changes affect my practice? What will I be expected to do when I receive an invoice from my locums? 

You will be expected to decide if the new rules apply by considering the terms of the contract. HMRC will issue a new employment status tool at the end of February which you will be able to use to make the decision. Ideally you should decide at the start of the engagement, before receiving an invoice.

If the employment status tool says that the contract would have been employment, then you must add the Locum to your payroll using declaration C of the starter form, which has the effect of deducting tax at Basic Rate, unless the Locum can give you a P45 for the existing tax year.  You should also show the Locum as a starter on the FPS (Full Payment Summary i.e. the normal payroll report that must be submitted to HMRC on, or before payment is made).

Although you must set the Locum up on your payroll, the set-up process should exclude them for auto enrolment and for pay rolling benefits. You do not have to pay them any statutory payments even though you will be deducting employee’s national insurance. They must claim these through their own limited company.


Q. I am a Locum GP, sole trader who works through an agency, how will these changes affect me?

The changes affect personal service companies; however, agencies have always had to consider if the sole traders they place, are affected by the agency legislation. This states that where there is supervision, direction or control by anyone in the chain, the agency should pay the person through their own payroll and deduct PAYE tax and employee’s national insurance.


Q. I am a Locum GP who works as a limited company, I work directly with practices but also do some ad hoc agency work. How will these changes affect me?

The GP practices you work for must decide if the new rules apply for work done directly with them. And, if the agency work is ultimately for a Public Authority, such as a GP practice, then that practice should decide if the new rules apply for the ad hoc agency work and let the agency know. The agency will then have to make the deductions and pay employer’s NICs on the payment to your personal service company


Q. Where can I find out more information about this?

You can contact BHP Chartered Accountants. Led by partner Colin Haw and Jenny Hurst, BHP has a specialist team of medical accountants that can help advise you. You can contact BHP or follow this link for more information.  


Got more questions? are hosting a free webinar on the upcoming tax changes which will include a free Q&A session with specialist medical accountants to help you prepare for the new legislation. You can sign up below: 

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