copied with minor editing
What is happening?
As you may already be aware, the Government has brought in new IR35 tax legislation which is taking effect from 6th April 2017. All agency workers who work for the NHS via their own limited companies (also known as ‘Personal Service Companies ‘PSCs’) will be affected.
Who does it affect?
The changes apply to every NHS Trust and Public Body in the country, every candidate offering agency services to the NHS via a PSC, and to every recruitment agency. There are no exceptions for anybody and there is no way to get around the new legislation.
Any locum role that is considered to be “within IR35” will have to have PAYE tax and national insurance contributions deducted at source. “IR35” refers to the section of the tax code dealing with the taxation of contractors. A candidate will be “within IR35” if they are subject to the supervision, direction or control of the client and cannot be substituted.
Currently, we have been advised without exception that all medical locum and nursing roles are considered by the NHS frameworks and the NHS Trusts to be “within IR35”
What do the new rules say?
The NHS trust will have the responsibility to determine whether or not a role is considered to be “within IR35” and will need to communicate this to the recruitment agency. As stated above, it is understood that as far as the NHS is concerned, all medical locum and nursing roles will be considered to be within IR35.
For any payments made by a Trust or a recruitment agency to a PSC on or after 6th April 2017, it will be necessary for them to deduct PAYE income tax and NICs at source, prior to a payment to your PSC.
The new rules apply to all payments made on or after 6th April 2017, even if the work was done before that time.
If you are placed at a Trust via your PSC, you can still be paid to that PSC but due to the need to deduct PAYE tax and national insurance the current tax benefit of the PSC will be lost.
If you have any questions about your specific situation, we recommend seeking professional advice from an accountant or somebody who is similarly qualified.
What is MSU doing?
We are keeping a close eye on further developments and taking into account any new guidance which is issued by the Government, HMRC or relevant professional bodies.
For all of our agency workers currently working at NHS Trusts via a PSC, the new tax change is likely to significantly affect pay. We understand that many candidates are therefore looking to engage via an ‘Umbrella’ company arrangement. An umbrella company acts as an ‘employer’ intermediary to agency contractors who work under fixed term contract assignments and has advantages over working through PAYE arrangements.
We have spoken to all the major umbrella providers to explore what they can offer. As each Umbrella company is subject to the same legislation, we do not expect any major difference (if any) between the take-home pay calculations through the different umbrellas. We anticipate that an umbrella company’s quality of service, experience and reliability will be the key factors for candidates.
If you want to continue working via your PSC you can do so subject to confirmation from the Trust, but the new tax rules will apply to you as described above. We expect that there may be NHS Trusts who will now refuse to accept any candidates via a PSC.
What happens now?
MSU is currently researching the best Umbrella products/providers who we believe will meet all the requirements of our candidates, have significant experience in the medical sector and provide a reliable, high-quality service.