What is IR35 and what does it mean for locum pharmacists?

5 Mins

Remember the days when IR35 was just a passing mention from your accountant? The landscape h...

Pete Rossiter

By Pete Rossiter

Remember the days when IR35 was just a passing mention from your accountant? The landscape has shifted, with recent headlines and rule changes putting IR35 firmly in the spotlight. As a locum pharmacist, understanding the meaning of IR35 and its implications is crucial for navigating your work arrangements and taxes effectively.

Deciphering IR35: Understanding its Implications

IR35 is a part of HMRC’s legislation; think of it as HMRC's way of ensuring fairness in the tax system. 

Many locum pharmacists operate through limited companies (PSCs) to enjoy tax advantages like expense deductions and potentially lower tax bills compared to direct employment. However, IR35 aims to prevent "disguised employment," where someone acts like an employee but enjoys self-employed tax benefits. This is where things get complex for locum pharmacists.

Factors like work control, substitution rights, and financial risk determine whether you're deemed "inside IR35" or "outside IR35,"  significantly impacting your tax bill. "Inside IR35" means paying employee-like taxes even through your PSC, while "outside" retains the PSC benefits.

Inside IR35: How It Affects Locum Pharmacist Jobs

In previous years, the responsibility and the liability were always on locum pharmacists to prove to HMRC that they were truly self-employed and therefore fell outside of IR35. But now there have been some changes to IR35 legislation that affect locums.

These are:

  • From April 2017, public authorities became responsible for deciding if the rules applied where they contracted workers who provided services through their own intermediary.
  • From April 6, 2021, all public authorities and medium and large-sized clients outside the public sector are responsible for deciding if the IR35 rules apply.

If a worker provides services to a small client outside the public sector, the worker’s intermediary is responsible for deciding the worker’s employment status and if the rules apply.

This has brought about a shift in who is responsible and, therefore, who is liable for the extra tax if HMRC deems someone to fall within the legislation. Many clients don’t want to take any risk and therefore make their contractors employed.

Navigating IR35 Tax: Insights for Locum Pharmacists

Navigating the interplay of IR35 and PSCs requires careful attention for locum pharmacists. Being "inside IR35" means potentially hefty tax implications, with employee-like income tax and National Insurance contributions eating into your take-home pay. Public and large private sector clients are now assessing your IR35 status, which further complicates things.

To handle this well, locum pharmacists should look at their work arrangements closely. Factors like how much control the client has over their work, if they can substitute someone else, and the financial risks involved are important. By assessing these factors carefully and seeking advice when needed, locum pharmacists can better manage their IR35 status and reduce tax burdens.

Preparing for IR35 Tax: Strategies for Locum Pharmacists

Utilise the CEST (‘Check employment status for tax’) tool for a preliminary assessment, but don't hesitate to seek professional guidance from tax advisors specialising in IR35 tax for locum pharmacists. This tool can be used to understand your position and see whether you can do anything differently to ensure you can stay with your personal service company. 

Some of the elements HMRC considers part of this are:

  • Whether you have any financial risks
  • Whether you have the right to send a substitute
  • Whether you do or can work for other businesses at the same time
  • Who has control of how and when the work is done

Careful consideration needs to be given when reviewing your contract and how locum pharmacists can ensure they do not fall foul of these rules. We always recommend speaking to a tax professional to gain clarity on your position if you are unsure.

How Quad Recruitment Can Help With IR35

Understanding the IR35 meaning and its implications is essential for locum pharmacists operating within the framework of this legislation. If you would like to speak to a tax professional, Quad Recruitment has partnered with Sempar Accountancy and Tax Limited, who can not only advise you on IR35 legislation and help you unlock big tax savings, but also help you with your annual tax and accounting compliance.

Are you ready to explore your options? Our locum hub has the answers to get you started as a locum pharmacist with Quad Recruitment.

Alternatively, contact us at 01244 621477 or via email at info@quadrecruitment.com to discuss locum pharmacist jobs or permanent positions we have available.