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.
Since April 2017, the NHS — not you — decides your IR35 status for NHS engagements. And NHS organisations almost always decide: inside IR35. This means PAYE tax and employee NI are deducted before you receive payment, regardless of whether you operate through a limited company or as a sole trader.
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
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.
Even inside IR35, your limited company still legally exists and must: file annual accounts with Companies House, submit a corporation tax return, maintain a company bank account, and comply with all director obligations. The admin burden does not disappear when the tax advantage does. If your company earns no income outside NHS PAYE engagements, the cost and hassle of maintaining it may outweigh any residual benefit.
Practical Steps to Review Your Position
Looking for Locum GP Sessions?
SHR Group connects locum GPs with GP surgeries, PCNs, urgent care providers, and OOH services across the UK. We handle compliance centrally and can advise on PAYE, sole trader, and agency payment arrangements.