Guide
IR35 for NHS locums: why trust shifts are taxed inside
Updated
Since 2017, NHS bodies decide the IR35 status of the locums they engage, and for standard trust shifts the determination is almost always inside. Here is what that does to your rate, line by line.
Who decides, and what they decide
NHS trusts, health boards and other public authorities have determined IR35 status for their off-payroll workers since April 2017, and must issue a Status Determination Statement for each engagement (gov.uk: off-payroll working). A standard locum shift, worked on the ward or in the dispensary under the trust's direction, on the trust's rota, with no right to send a substitute, has the shape of employment, which is why trusts determine nearly all such engagements inside IR35.
Inside IR35 you are taxed like an employee. In practice most agencies route inside-IR35 locums through an umbrella company, and the deductions land in a fixed order: the umbrella's margin, then employer National Insurance and the apprenticeship levy, and only then your own income tax and employee NI.
The waterfall at £45/hour
| Line | Amount |
|---|---|
| Assignment income (invoiced) | £79,200 |
| Umbrella margin (£25 × 44 weeks) | −£1,100.00 |
| Employer NI (15% above £5,000) | −£9,490.26 |
| Apprenticeship levy (0.5%) | −£341.34 |
| Your gross pay | £68,268.40 |
| Income tax (PAYE) | −£14,739.36 |
| Employee NI (8% / 2%) | −£3,375.97 |
| Take-home | £50,153 |
That is 63.3% of the invoiced value. The £9,490 of employer NI is the line that surprises most locums: it is funded from your assignment rate because, inside IR35, that rate is the employer's budget, not your gross pay. This is lawful, provided every line is itemised on your payslip (gov.uk: working through an umbrella company).
The routes that avoid the umbrella deductions
- Trust bank or direct engagement: the trust employs you for the shift and pays its own employer NI on top of your rate rather than out of it. At £45/hour the difference is about £6,340 a year, and bank shifts are usually NHS-pensionable.
- Genuinely outside-IR35 work: some engagements, typically short cover across multiple sites, insourcing work, or private-sector clinics, are determined outside. Then a limited company structure applies; see the locum doctor tax guide.
- Self-employment outside the rules: IR35 only applies when you work through an intermediary such as your own company. A locum GP engaged directly by a practice as a self-employed contractor is assessed under ordinary employment-status rules instead.
A Status Determination Statement can be disputed through the engager's process, but do not work an inside-IR35 shift on outside-IR35 assumptions. If the determination stands, so do the deductions. This page is general information, not tax advice.