NHS losing locums due to IR35

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The NHS has lost roughly a quarter of its locum workforce in a matter of months, with doctors, nurses, allied health professionals, midwives, practitioners and radiographers amongst those walking out.

  • 28% of those who left did so because they refused to work inside IR35
  • 50% were told they wouldn’t be hired unless they used a specific umbrella company
  • 11% offered to stay inside IR35 subject to a rate rise, but were refused
  • 87% said they will now focus predominantly on the private sector

Keeping hold of the remaining locums has proven costly for the NHS. Some locums have managed to increase their rates to counteract the tax take, whilst others are simply working less.

  • 44% of those who remained reduced their hours working in the NHS
  • 17% who stayed have received a rate rise

Inaccurate IR35 assessments costing the NHS critical skills

Following recent reports that HMRC is attempting to enforce use of its distorted IR35 tool within the NHS, the survey findings show a significant number of locums have left as a direct result of this.

60% were contentiously deemed caught by IR35 as a result of blanket rules imposed by their trust. Another 15% of locums were individually assessed by the NHS using HMRC’s tool and told that IR35 applies.

  • 76% of locums didn’t agree with their assessment result
  • 58% said they had no input in the decision making process of their assessment

One respondent noted: “The result was clearly predetermined. It was like acting out a script.” Another claimed NHS administrators treated IR35 assessments as mere procedure, adding that seven locums received the same generic response when querying their results individually.

Staggeringly, only 3% of assessments involved a detailed look of the locum’s arrangement, encompassing relevant case law and abiding by the legislation’s ‘reasonable care’ requirement.

Anxiety and depression – the impact of the reforms on NHS locums

It’s not just patient care that is suffering. Multiple locums report a sharp rise in the number of NHS staff being treated for anxiety and depression, as the strain induced by intensifying skills shortages takes its toll.

The reforms are causing further problems for locums outside the workplace. Several respondents report that they are already in debt after falling behind on monthly payments such as mortgages, which were structured around their earnings prior to the public sector changes.

“If some locums can’t survive in the NHS, the situation is only going to get worse before it gets better as they continue to leave,” notes Chaplin. “The only way that Government and HMRC can dig themselves out of this mess is to repeal the reforms.

“When the nation’s health service is being threatened by a piece of tax legislation, it’s a sign that the powers that be have overstepped the mark.”

Botched implementation by both HMRC and the NHS?

Chaplin says that this mess is due to terrible planning and implementation by both HMRC and the NHS.

“The fundamental problem HMRC are trying to address with is that employers are avoiding the payment of employers NI, which the NHS did not pay when it hired freelance locums who used limited companies.”

“The Off-Payroll Reforms are designed to assess freelancers as ‘deemed employees’. The NHS assessed thousands of freelancers as ‘deemed employees’ but as their ‘deemed employer’ refused to pay the additional employers NI due, and instead tried to pass this extra cost onto the workers by deducting it from their ‘deemed salary’, resulting in a massive pay cut for all their freelance workers, ” says Chaplin.

It’s no wonder, based on this gross unfair policy by the NHS, that locums have jumped ship. Can you imagine an employee agreeing to pay the 13.8% employers NI for their employer by way of a dramatic salary cut? No, but that’s exactly what the NHS tried to do, rather than pay the employers NI which was due by them as a ‘deemed employer’.

The NHS now needs to revisit this unfair practice and start paying their fair share of the employment taxes due under the Off-Payroll Reforms to stem the exodus of these key workers.


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