Working with Locum Agencies
Many of our locum doctors are paid through locum agencies. Many are paid directly by the end user.
Until the 1990s locum agencies were happy to engage locums on a self employed basis. The locums were paid gross without deduction of any tax or national insurance.
HMRC then brought in a rule which made the locum agencies responsible for unpaid tax if they engaged locums on this basis.
This is why locum agencies are very reluctant to allow locums to operate as self employed contractors.
Agencies are happy to pay locums under a PAYE salary. Provided the locum agency operates PAYE properly, they will not be held liable for the locum’s unpaid tax or national insurance.
An agency can pay a personal service company gross and will not be liable for the locum’s unpaid tax or national insurance. The agency has no responsibility to advise the locum whether or not IR35 legislation is applicable to a particular contract. This is entirely the responsibility of the locum who will also be the director of the personal service company. Since the introduction of ‘off payroll’ ruling most limited companies quoting through agencies will be paid through PAYE.
An agency can pay an umbrella company gross and will not be liable for the locum’s unpaid tax or national insurance. Most umbrella companies operate as if IR35 applies to all locum contracts. This is nearly always the case since the introduction of the ‘off payroll’ working rules in 2017.
Most agencies are happy to pay locums by salary through a personal service company or through an umbrella company. The agencies have no responsibility to advise the locum as to their tax and national insurance responsibilities in these circumstances.
Most agencies will not employ a locum at all on a self employed basis.
Choose where best to get your tax advice
Locum agencies are not tax advisers, they are keen to promote their services. We recommend you take tax advice from a qualified professional. We recommend you do not take tax advice from a locum agency. Always obtain tax advice in writing.
How we can help
We will give you written professional advice regarding your tax and national insurance situation.
We will advise which is the best option for you.