IR35 — formally known as the off-payroll working rules — has created significant confusion for locum GPs working through limited companies since the NHS public sector rollout in 2017. For many GPs, this complexity has led to expensive mistakes: paying unnecessary tax through the wrong structure, accumulating compliance obligations for a limited company that delivers no real benefit, or missing the opportunity to structure their income more efficiently for private and non-NHS work. This guide cuts through the noise and gives you a clear, practical picture of where you stand in 2025.
What Is IR35?
IR35 is a set of HMRC tax rules designed to ensure that workers who provide services through an intermediary — typically a personal service company or limited company — and who would be considered employees if engaged directly, pay broadly the same income tax and National Insurance as employees. In simple terms: if your working arrangements look and feel like employment, HMRC believes you should be taxed like an employee — regardless of the company structure you use.
The rules apply when three key employment tests are considered to be met: control (the client directs how, where, and when you work), substitution (you cannot send someone else in your place), and mutuality of obligation (there is an expectation of ongoing work). For most locum GP engagements in NHS settings, all three tests point firmly toward employment — which is why NHS organisations almost universally assess GP locum engagements as inside IR35.
The 2017 Public Sector Reform: What Changed
Before April 2017, locum GPs working through limited companies were responsible for assessing their own IR35 status. Most assessed themselves as outside IR35 — whether accurately or not — and enjoyed significant tax advantages as a result.
From April 2017, for public sector engagements (including all NHS work), the responsibility for IR35 determination shifted to the end client — the NHS organisation, GP practice, or other public body. This was extended to medium and large private sector engagements in April 2021. The practical consequence for NHS locum GPs was immediate and significant: NHS organisations began assessing almost all GP locum engagements as inside IR35, changing the tax treatment overnight for thousands of GPs.
Inside vs Outside IR35: What It Means in Practice
| Factor | Inside IR35 | Outside IR35 |
|---|---|---|
| Tax treatment | PAYE income tax + employee NI deducted before payment | Tax paid via self-assessment / corporation tax — more flexibility |
| Who determines status (NHS) | NHS organisation (end client) — since April 2017 | Also the NHS organisation — but rarely used for GP locums |
| Limited company benefit | Very limited for NHS work — company overhead with no tax advantage | Can be tax-efficient depending on income level and structure |
| Typical NHS GP locum | Almost all NHS engagements assessed here | Extremely rare for NHS settings |
| Private / non-NHS work | Depends on engagement structure | Possible if genuine B2B arrangement exists |
| Employer NI | Paid by the fee payer (agency or practice) on top of your rate | Not applicable |
Your Three Trading Structure Options
Sole Trader
- Simplest structure
- No IR35 complexity for NHS work
- Low admin overhead
- All profits immediately taxed
Recommended for most GPs primarily doing NHS locum work. Income declared through self-assessment. The most tax-efficient structure once IR35 removes the limited company advantage.
Limited Company
- Can be useful for non-NHS/private income
- Potential benefit for mixed income streams
- Minimal NHS tax benefit due to IR35
- Ongoing admin & compliance costs
Worth considering only if you have significant private clinic, medico-legal, or non-NHS income. Requires specialist medical accountant to manage correctly.
Umbrella / PAYE
- Zero admin burden
- Automatic tax deduction
- Employer NI reduces take-home
- Least financially efficient
Most straightforward approach. Umbrella company employs you and deducts PAYE. Suitable for GPs who want no administrative responsibility whatsoever.
Status Determination Statements (SDS): Your Rights
Under the off-payroll rules, the NHS organisation engaging you must provide a written Status Determination Statement (SDS) before the engagement begins. This document sets out whether the role is inside or outside IR35 and the reasons for that determination.
You have the right to challenge an SDS you believe is incorrect — but in practice, challenging an NHS determination of inside IR35 for a standard GP locum engagement is very unlikely to succeed. The working arrangements of a typical NHS GP locum session (using practice systems, following protocols, reporting to a clinical lead, not able to send a substitute) simply do not support an outside determination.
Where an SDS challenge can be genuinely useful is for more unusual arrangements — for example, a GP providing genuinely independent clinical advisory services to a private organisation — where a proper business-to-business relationship may exist.
Can NHS Locum GP Work Be Outside IR35?
This is the question most GPs with limited companies want answered — and the honest answer is: very rarely, and almost never for standard NHS GP surgery sessions.
An outside determination requires genuine indicators of self-employment: the right to substitute, an absence of mutuality of obligation, genuine financial risk, and operating as a business providing services to multiple clients on a commercial basis. A GP working sessional shifts in a GP surgery alongside the regular clinical team, using practice IT systems, following the clinical lead's governance requirements, does not meet this bar.
Some private sector engagements — working as a medical advisor to a corporate health company, for example, or providing medico-legal expert witness services — may legitimately fall outside IR35. If you have this type of income stream alongside your NHS locum work, a mixed structure (limited company for the private work, sole trader or PAYE for NHS sessions) may be appropriate. Discuss this with a specialist medical accountant.
Practical Steps to Review Your Position
List all your income sources — NHS locum sessions, private work, medico-legal, educational roles, portfolio work. Identify which are NHS/public sector and which are private.
Book a specialist medical accountant review — not a general accountant. Ask specifically about whether your current structure is optimal given inside IR35 on all NHS work. Expect to pay £150–£300 for a proper review; it will typically save multiples of that.
Check any SDS documents you have received from NHS organisations. Confirm they have been formally issued and are on file — you are entitled to these before each engagement begins.
Consider consolidating to sole trader for NHS work if your limited company serves no material purpose for your current income mix. The transition is straightforward but must be managed carefully for timing and pension purposes.
Set up a pension arrangement early — regardless of trading structure. Whether it is GP SOLO for the NHS pension, a SIPP, or both, regular pension contributions from the outset are essential. Many GPs focus on IR35 while neglecting pension planning — which carries a higher long-term cost.
