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Will IR35 change locum life forever?


Typically, locums have been treated as if they are self-employed, giving them certain advantages over employees who are taxed on a pay as you earn (PAYE) basis.


However, the status of locums throws up a number of issues.


Calling a pharmacist a locum does not automatically confer self-employed status on a pharmacist. A few years ago, HMRC investigated a number of pharmacy businesses that had treated locums as if they were self-employed. There were particular issues over locums who had worked in the same pharmacy for a long time; or if they worked a regular pattern, such as every Wednesday. HMRC took the view that these locums were really employees and even if the locums had paid their income tax and National Insurance, the owners were exposed to the risk of penalties and interest on the tax they had not deducted.


The new IR35 legislation will be implemented on 6th April 2021. Locum pharmacist Andrew Jukes has taken some time to write the article below to highlight a number of pressing issues that are now swiftly emerging.


Before continuing it is important to note that no individual or organisation can advise you on your own specific tax circumstances unless they are qualified and authorised to do so. This article seeks to provide a summary of the background issues that locum pharmacists will shortly face as the new IR35 tax arrangements are implemented in April 2021. Andrew also provides some helpful signposting to qualified and appropriate sources of advisory support.


What is IR35?


IR35 is an item of tax legislation aimed at addressing perceived tax avoidance, in the main via limited company contractors, such that contractual or locum workers taxation, is aligned to that of employees.


So what is the relevance and impact to locum pharmacists after IR35 is implemented from April 6th 2021?


The first aspect is that only medium to large companies as defined by Her Majesties Revenue and Customs (HMRC), will be subject to the applied legislation. This is the first thing to check if this applies to you in your locum activity (see table below).


If you are contracting to companies that are subject to the legislation, then you will no longer receive your earnings without any tax deducted. Many contracts from 6th April 2021 will be deemed inside IR35 and that will mean that PAYE taxation and national insurance will be deducted at source by the end client (i.e. agency or hiring organisation).


This essentially presents a situation from April 2021, that locum pharmacists may not be able to use their limited companies as before and will end up being renumerated via ‘PAYE’ or ‘direct engagement models’. This can represent a significant reduction in locum pharmacist salaries, as the tax-efficient operation of limited companies will not be permitted.


The legislation does not apply to those locums working as sole traders or via umbrella companies as appropriate taxation will occur. However, the designation of employment status may still be affected, as this is closely related to IR35. You will have to check how this may affect terms and conditions.


The burden of responsibility for assigning IR35 status will be via the ‘end client’ or hiring firm, utilising the HMRC IR35 tax assessment tool (‘CEST’=Check Employment Status for Tax). This will cause companies a higher administrative burden to implement and oversee.


What might you need to consider?


Every situation is different and requires early preparation for the changes that are coming. I will signpost you to some recognised sources of advice and support in the table that follows. The impact could be potentially significant in terms of salary reduction. This will largely be because you will not be permitted to operate via a limited company.


So what new arrangements will you be subject to?


You will need to be prepared for how your working benefits will present themselves.


After 6th April 2021, will you receive any form of holiday, sick pay and pension benefits, under the new contractual arrangements?


It is the case that expenses will not be paid to the same level, as was the case via previously limited company operation. You need to conduct a financial comparison of pre and post April 6th 2021 as a locum pharmacist that are applicable, in your circumstances.


The table below provides a route to answering your questions, and each individual locum pharmacist will need to take responsibility to ensure they have prepared for the changes and mitigated any risks they may face. The sources below serve to provide clarity on specific tax aspects and related issues, in order to support locum pharmacists.


Potential sources of official advice and support for locum pharmacists and pharmacy operators to engage with in advance of the IR35 roll out from April 6th 2021.


This list is not exhaustive.


1. End Client.


  • The organisation or company engaging you as a locum should confirm if IR35 applies to them (as per ‘HMRC’ definitions).
  • If so they should inform you of your assigned IR35 status.
  • Cannot provide you with specific personalised overall tax advice as they are not authorised to do so.


2. Your own certified accountant.


  • They know your working pattern and history.
  • They can advise on IR35 and specific personalised tax matters.


3. Locum agency.


  • If you make a contract via a locum agency, they will be able to give some general level advice about your work assignments and IR35 taxation, however, they cannot provide you with specific personalised, overall tax advice as they are not authorised to do so.


4. The Pharmacists’ Defence Association Union.


  • Can advise members on issues involving work-related scenarios, regulation, disputes professional issues or signpost as appropriate. ‘PDAU’ cannot provide you with specific personalised overall tax advice as they are not authorised to do so.
  • Click here to access the PDAU website.
  • 0121 694 7007


5. Pharmacist Support charity


  • Confidential support and advice provided in many areas including stress, financial assistance, debt and employment law etc. However, they Cannot provide you with specific personalised, overall tax advice as they are not authorised to do so.
  • Click here to access the Pharmacsit Support website.
  • 0808 168 2233


6. Her Majesty’s Revenue and Customs


  • Can advise on your IR35 status and determination.
  • Useful if ‘end client’ determination in question, especially if you don’t have an accountant.
  • A useful source of general advice on preparation for IR35 implementation. However, they cannot provide accountancy services. You will have to oversee your overall tax affairs and submit the relevant documents (seek advice), or via an authorised tax specialist or accountant.
  • General TAX advice via their website that you can access here.


7. National Pharmacy Association


  • Support membership to achieve professionally and commercially in the interest of patients.
  • Can advise members commercially or professionally on aspects of IR35.
  • Cannot provide you with specific personalised overall tax advice as they are not authorised to do so.
  • You can access their website by clicking here.
  • 01727 858687


8. The company chemists’ association


  • Represents the interests of its larger multiple pharmacy operator members, from the community pharmacy sector.
  • Can advise pharmacy operators on various aspects relating to the implementation of IR35 in April 2021.
  • Cannot provide you with specific personalised overall tax advice as they are not authorised to do so.
  • You can access their website by clicking here.
  • 02037418254


9. Contractor calculator


  • Expert advice (across all business sectors) on aspects related to contracting (i.e., working as a locum).
  • The ‘go to’ experts on all facets of IR35. There is a wealth of resource on the website and various publications on the topic and current developments.
  • Cannot provide you with specific personalised overall tax advice as they are not authorised to do so.
  • You can access their website by clicking here.


A respectful reality check, and a call to action


There are many thousands of Locum Pharmacists engaging in the private sector (i.e community pharmacy/private hospitals), that could potentially be impacted by the implementation of IR35 on 6th April 2021.


My personal motivation for creating this supporting article is that I was totally unprepared for the public sector roll out in 2017 of IR35. It did a lot of damage and compromised the financial position of many locum contractors (not just pharmacists). The effects are well documented in the public arena.


The reality


The legislation is confirmed, and IR35 will be implemented in the private sector on 6th April 2021. There is no longer a chance to lobby or circumnavigate what is coming on the horizon. If you prepare and establish the facts you can plan for the situation more readily, or make changes. If you do not plan or become aware of this issue then you could be in for a change in financial circumstances that are unexpected that have detrimental impacts on you personally.


Call to Action


I would advise taking the time now to seek the advice you need. Please be aware that each situation is different and you need to utilise any sources of advice that apply to your given situation. It may be the case that you engage services for several companies or have a portfolio style of working. All of this has to be considered. Please act to ensure you have the information you need in advance and factor in the time it may take to clarify everything. Taxation issues are seldom plain sailing.


A Final word and reflection


IR35 has caused significant impacts in many sectors. Alongside the personal finances which are a valid consideration and concern, there are also ‘secondary effects’. You cannot predict the future, and it is beyond the scope of this article, but you may wish to consider how such implementation may affect workforce dynamics if locum pharmacists consider changing to permanent roles or leave altogether, and how continuity of services may be affected? How would this impact on remaining staff in these workplaces?. The whole viability of being a locum could be called into question with far reaching consequences.


I saw all this ‘play out’ in the public sector, in 2017 and felt the impacts personally. I hope with a little forward planning, awareness and a realisation that this change will need to be faced, it can be approached and tackled more effectively, with less stress.


Andrew Jukes is a locum pharmacist. 


Read more


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