IR35 – are you ready?

We are sure you have heard about the changes coming into effect in April 2021 to the private sector. It is paramount that you are prepared and understand the effects that the new legislation around IR35 may have on you, and the way you invoice as a locum worker.

IR35 is a tax law that targets those who falsely position themselves as Limited Company/Self-employed contractors in order to pay less tax. The new legislation ensures that contractors/locums pay the same tax and NI contributions as an equivalent employee.

What does this mean?

The new rules transfer the responsibility for assessing the IR35 status of your contract to the end client (practice), unless the end client is considered a ‘small business’. If your contract falls inside IR35, then your income for that contract will be subject to income tax and national insurance in the same way as an employee. However, you may not receive statutory benefits that are associated with employment such as holiday and sick pay.

You also need to be aware of the preferences and restrictions that may be enforced by any client practice following the new legislation from April onwards. In consulting with the large corporate veterinary groups, due to the shift in responsibility, Carlton Professional Recruitment has ascertained that many are uncomfortable with the exposure risk associated to engaging self-employed and Limited Company Locums. To mitigate their risk, most of the large corporate veterinary groups are making it policy going forward to only engage veterinary locums through “Umbrella Companies” or as Temporary Workers (deducting PAYE and NI). Although the legislation comes into effect from April, some corporates have already released their statements and will be putting procedures in place from January.

What is an Umbrella Company?

An Umbrella Company is a separate company that acts as an employer for agency contractors/locums who work on temporary or fixed term contracts. They are also the middleman between the contractor/locum and the end client (practice) or agency. An Umbrella Company will deduct your income tax and NI before paying you through their PAYE system, along with other relevant deductions.

What can you do?

In working as a locum contractor, we understand that it’s important to ensure that you make financial decisions that are not only beneficial to your situation, but that are compliant to the prevailing legislation. There are a variety of ways in which a locum can develop a relationship with a client practice, and it’s really important to ensure that you make an informed decision on your financial status and, in particular, are aware of and working within all regulations, including the IR35 framework.

We do not dictate what arrangements you make and cannot recommend any specific avenue. It is essential that you take professional, specific financial advice from an accredited source. However, we have collated a range of Financial Service Providers who deem themselves experts on IR35, and who have veterinary locum specific options available. The Financial Service Providers we have collated are also on the preferred supplier lists (PSL) for the corporate veterinary group PSLs we have seen so far. They will be able to answer questions that you have and guide you to the best options for you moving forward. It’s worth noting that any financial supplier that you engage is independent of any agency and so portable to whatever work you undertake.

For more information on the Financial Service Providers, please contact the Carlton Professional Recruitment team on 0115 968 1515 or email [email protected]. We are happy to answer queries and discuss options available to you.

Megan Wakawaka:     Company Manager and Lead Recruitment Consultant

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