IR35 rules changed in April 2026. Learn how the new regulations impact locum doctors in Northern Ireland, your take-home pay, and whether you are inside or outside IR35.
<p>Following our recent article on <a href="/blog/umbrella-company-changes-april-2026-locum-doctors">umbrella company tax changes</a>, many locum doctors have asked us about IR35 and how it applies to their work. If you are working as a locum through a limited company or considering setting one up, understanding IR35 is crucial to your financial planning.</p><h2>What is IR35?</h2><p>IR35 is anti-avoidance tax legislation designed to identify disguised employment — where someone works like an employee but operates through their own limited company to reduce tax and National Insurance contributions.</p><p>For locum doctors, IR35 determines whether you are genuinely self-employed (outside IR35) or effectively an employee (inside IR35), which significantly impacts your take-home pay.</p><h2>What Changed in April 2026?</h2><p>While the fundamental IR35 framework remains unchanged, April 2026 brought enforcement updates and clearer guidance for NHS workers:</p><h3>1. Standardised Determination Statements</h3><p>All NHS trusts and health boards in Northern Ireland must now use standardised IR35 status determination statements. Previously, different trusts used varying criteria, creating confusion for locum doctors working across multiple locations.</p><h3>2. Right to Challenge Process</h3><p>Locum doctors now have a formal 45-day window to challenge their IR35 status determination. If you believe you have been incorrectly assessed as inside IR35, you can request a review with documented evidence of your working practices.</p><h3>3. HMRC Compliance Reviews</h3><p>HMRC has increased compliance checks on NHS locum arrangements. Trusts are now required to review status determinations annually and document their reasoning more thoroughly.</p><h2>Inside vs Outside IR35: What is the Difference?</h2><h3>Inside IR35</h3><p>If your contract is deemed inside IR35, you are treated as an employee for tax purposes:</p><ul><li><strong>Tax deducted at source</strong> by the trust or agency (fee-payer)</li><li><strong>Higher tax liability</strong> — you pay roughly the same tax as a PAYE employee</li><li><strong>Limited expense claims</strong> — only minimal business expenses allowed</li><li><strong>No employer benefits</strong> despite being taxed as an employee</li></ul><p><strong>Typical take-home: 55-60% of gross income</strong></p><h3>Outside IR35</h3><p>If you are genuinely self-employed and outside IR35:</p><ul><li><strong>You manage your own tax</strong> through self-assessment</li><li><strong>Salary/dividend split</strong> — more tax-efficient income extraction</li><li><strong>Business expense claims</strong> — equipment, professional fees, travel, accommodation</li><li><strong>Greater control</strong> over assignments and work practices</li></ul><p><strong>Typical take-home: 70-80% of gross income</strong></p><h2>How is Your IR35 Status Determined?</h2><p>NHS trusts assess your IR35 status using three key tests:</p><h3>1. Control</h3><ul><li>Does the trust dictate how, when, and where you work?</li><li>Can you send a substitute if you are unavailable?</li><li>Do you control your clinical methods and decisions?</li></ul><p><strong>Locum doctor reality:</strong> You typically have clinical autonomy but must follow trust protocols and work specified shifts, creating a grey area.</p><h3>2. Mutuality of Obligation</h3><ul><li>Is the trust obligated to offer you work?</li><li>Are you obligated to accept work offered?</li></ul><p><strong>Locum doctor reality:</strong> Most locum contracts have no mutual obligation — you can decline shifts, and trusts are not required to offer them.</p><h3>3. Personal Service</h3><ul><li>Must you personally perform the work?</li><li>Can you send a qualified substitute?</li></ul><p><strong>Locum doctor reality:</strong> GMC registration and trust credentialing usually require you personally to deliver care, making substitution impractical.</p><h2>IR35 Status for Different Locum Arrangements</h2><h3>Short-Term Ad Hoc Locum Shifts</h3><p><strong>Likely status:</strong> Outside IR35</p><p>If you are picking up individual shifts across multiple trusts, free to decline shifts without penalty, not integrated into the trust structure, providing your own indemnity insurance, and using your own equipment where possible.</p><h3>Long-Term Single Trust Contracts</h3><p><strong>Likely status:</strong> Inside IR35</p><p>If you are working at one trust for 3+ months continuously, expected to attend team meetings and participate in rotas, integrated into department operations like permanent staff, given trust email and IT systems, or supervised by trust consultants.</p><h3>Agency-Placed Locums</h3><p><strong>Status varies</strong> based on contract terms and actual working practices, not just what the contract says. HMRC looks at the reality of your working arrangement.</p><h2>What Should You Do?</h2><h3>1. Review Your Status Determination Statement</h3><p>Request your status determination from every trust or agency you work with. They are legally required to provide it.</p><h3>2. Document Your Working Practices</h3><p>Keep evidence of declined shifts (proves no mutuality), multiple concurrent engagements (proves genuine self-employment), business expenses and equipment you provide, and your control over clinical methods.</p><h3>3. Consider Your Options</h3><p><strong>If you are consistently inside IR35:</strong> Using a limited company may no longer be tax-efficient. An umbrella company might be simpler (see our <a href="/blog/umbrella-company-changes-april-2026-locum-doctors">umbrella company guide</a>). PAYE through an agency is the most straightforward option.</p><p><strong>If you are genuinely outside IR35:</strong> A limited company remains tax-efficient. Ensure your contracts and working practices support outside IR35 status. Consider professional IR35 insurance to cover investigation costs.</p><h3>4. Get Professional Advice</h3><p>IR35 is complex and fact-specific. Consider an accountant specialising in medical contractors, an IR35 status review service, or professional indemnity with IR35 cover.</p><h2>How Grayscale Medical Can Help</h2><p>At Grayscale Medical, we understand IR35 complexity for locum doctors in Northern Ireland. When we place you with a trust, we request and review status determinations on your behalf, help you understand your IR35 status for each placement, facilitate umbrella company or PAYE arrangements if you are inside IR35, and work with trusts to ensure determinations reflect actual working practices.</p><h2>Common IR35 Myths for Locum Doctors</h2><p><strong>Myth 1: Having a limited company means I am outside IR35.</strong> False. Your company structure does not determine IR35 status — your actual working practices do.</p><p><strong>Myth 2: If I work through an agency, IR35 does not apply.</strong> False. IR35 applies regardless of whether you are engaged directly or through an agency.</p><p><strong>Myth 3: Short-term contracts are automatically outside IR35.</strong> Not necessarily. Even a 2-week contract can be inside IR35 if you are working like an employee during that time.</p><p><strong>Myth 4: The trust decides my IR35 status and I cannot change it.</strong> False. You have the right to challenge determinations within 45 days with supporting evidence.</p><h2>Key Takeaways</h2><ol><li>IR35 status depends on actual working practices, not contract terms alone</li><li>Ad hoc, multi-trust locum work is more likely to be outside IR35</li><li>Long-term single-trust contracts typically fall inside IR35</li><li>You have the right to challenge incorrect status determinations</li><li>Professional advice is essential for complex or high-earning arrangements</li></ol><h2>Need Help Navigating IR35?</h2><p>Whether you are new to locum work or reassessing your tax position, Grayscale Medical is here to help. We work with doctors across all specialties in Northern Ireland and can guide you through IR35 compliance while maximising your take-home pay.</p><p><strong><a href="/register">Register as a locum doctor</a></strong> or <strong><a href="/contact">contact us</a></strong> to discuss your specific situation.</p><p><em>Disclaimer: This article provides general information only and does not constitute tax or legal advice. IR35 rules are complex and fact-specific. Always consult a qualified accountant or tax advisor for advice on your individual circumstances.</em></p>
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