Changes to IR35 for GP practices


From the 6th of April, a legislative change is coming into force that will affect GP practices who use Locum GPs contracting through their own limited companies.

Many practices are unsure how this change will affect them, but we’re here to help. In this blog post I will explain what practices need to consider to help remain compliant after April, and what Network Locum (now Lantum) is doing to help practices manage under the new legislation.

For more background on IR35 you can read my previous blog here:

Determining IR35 Scope

For practices, the first step is to determine if the engagement falls within the IR35 rules. These rules were implemented in 2000 to ensure that where limited company contractors work under conditions that are essentially the same as those of their employed counterparts, they also pay the same in taxes. Prior to this legislation workers and companies could avoid certain taxes by simply changing their employment status without any actual change to their working conditions.

Until now it has been the locum’s responsibility to determine the IR35 status  and apply the rules accordingly. However after April this responsibility will fall to the practice.

This is an important step as HMRC have said any unpaid tax due to an incorrect application of the rules, or a failure to apply the test can be reclaimed from the practice, along with any interest or penalties.

In order to help identify which contracts should be subject to the IR35, HMRC have developed an online tool, knowns as the Employment Status Service ( Use of the tool is optional but HMRC will honor whatever result the practice arrives at from the tool. so long as the answers provided are accurate.

In order to interpret the questions correctly, and provide accurate answers, it's helpful to consider the essential spirit of the IR35 rules; to differentiate between contractors who are genuinely independent and those who more closely resemble employees.      

Contract is “in scope” and locum is paid directly by the practice

If the practice engages a GP via the GP’s limited company on a contract that is subject to IR35 rules, the locum will need to be taxed as if they were an employee of the practice. The practice will need to run PAYE for the locum, and pay the locums fees after first deducting both income tax and primary NIC and paying this over to HMRC. The practice will also need to report this via the RTI system as for salaried employees.

In addition, the practice will need to pay a further 13.8% of the fee in Employers NIC and will have to include payments to limited company locums in the apprenticeship levy calculations.

Although the locum is treated as an employee of the practice for tax purposes they are not actually employees so are not auto-enrolled for pension and don’t receive statutory employment provisions such as sick or holiday pay from the practice.

Income Tax calculation

The locum is primarily employed by their limited company and the locum work is considered as “secondary employment” for PAYE. This means the practice will require the locum to make declaration C on the New Starter Checklist and report the locum on the HMRC Full Payment Summary (FPS).

Unless the locum has a P45 with an updated tax code for the existing year, tax will be calculated at the base rate (20% flat rate).

From the hourly rate the practice will need to determine what is known as the “deemed payment” and it’s that will be used to apply the tax rate. The deemed payment is essentially that portion of the fee that would be deemed the salary and upon which tax would be paid. This is the total fee minus any deductible expenses incurred by the locum that would be a reimbursable expense met by the practice if the locum was an employee of the practice.  

Employers NIC

Prior to April, the hourly rate paid to limited company locums is loaded to account for various taxed the locum and the locums limited company should be paying. For contracts where IR35 applies, the locums limited company is liable for 13.8% employes NIC, as the locum’s employer. After April, the locums limited company no longer has to pay this and the practice is now the employer for tax purposes.  Therefore the hourly rate should be reduced to reflect that the locum no longer has to pay employer NIC and the practice pays this directly.

Apprenticeship Levy

Employers with a total annual wage bill over £3mil are obliged to make apprenticeship levy payments of 0.5% of on amounts over that amount. This is separate legislation but is relevant because after April any fees paid to limited company locums are counted as part of the practice pay bill and so are to be included when calculating the apprenticeship levy.

Contract is in scope and paid via Network Locum (now Lantum)

Network Locum (now Lantum) is committed to helping practices manage under the new legislation. If the practice determines the locum contract to be in scope but the locum is paid via Network locum, Network Locum (now Lantum) will perform the tax calculations, run payroll for the locum, deduct correct taxes, report and remit the taxes to HMRC.

The practice’s only obligation remains the initial determination of IR35 scope. Thereafter all other responsibilities fall to the Network Locum (now Lantum). This is a significant advantage to practices who still want access to limited company locums but without the significant administration and risk if the taxes are not paid correctly. The Network Locum (now Lantum) platform will make communicating IR35 status simple and straightforward and thereafter the practice simply has to pay the invoice to Network locum and we will take care of the rest.

Derek Charter

Derek is consulting at Network Locum (now Lantum)

Network Locum (now Lantum) is a GP app and website for connecting directly with practices old and new, and managing all session related admin.

We work alongside the NHS who recognise our tech as a solution to efficiently connecting all supply and demand. We are a GP-led health tech start-up whose mission is to support and empower GPs throughout their profession. Join us today.




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