Personal Service Companies and IR35 Legislation

As a locum doctor working through your own limited company (personal service company) you need to consider whether the IR35 regulations apply to you.

The IR35 regulations apply when a locum provides services to an end user (a hospital, general practice or a clinic) through a personal service company and where, if the personal service company was ignored, the locum would appear to be working as an employee of the end user.

This is relevant for locum doctors, particularly those working through agencies, who are often given the option of performing the same work for the same end user being paid by salary, operating through a personal service company or operating through an umbrella company.


IR35 affects all locums operating through personal service companies.  It effectively allows HMRC to treat locums as employees and tax them accordingly in circumstances where HMRC judges that those locums are employees in all but name.

Three criteria must be fulfilled for IR35 to apply:

  • The locum must personally perform the work.
  • A personal service company must be used rather than the locum contracting as an individual with the end user.
  • The terms of the arrangement must be such that the locum would be treated as an employee of the end user if the locum had contracted as an individual rather than through the personal service company.

The implications of IR35 for locums working through personal service companies are that:

If IR35 applies, any income paid by the end user to the personal service company will be treated as employment income for tax and national insurance purposes.

  • This would result in a LARGE REDUCTION in take home pay for the locum.


An agency has no responsibility to advise a locum on IR35.  Agencies are not professional tax advisors.


  •  We can help to determine whether the work you carry out through your personal service company will fall within the IR35 regulations.
  • We can help you make the decision whether to work through a personal service company, be paid by salary, operate through an umbrella company or trade as a self employed contractor.
  • We will advise you which is the best option for you.