How does the mini-budget impact off-payroll working for healthcare professionals?

The Chancellor, Kwasi Kwarteng, has advised that as of April 2023, the reforms to the off-payroll introduced in 2017 over a four-year period across both the public and private sectors, will be repealed.

This means that the onus for determining employment status and paying the appropriate amount of tax and National Insurance Contributions (NIC) will now be the responsibility of the intermediary from April 2023.

This announcement is a reversal of the off-payroll working rules which started with the public sector in 2017 and was further rolled out to the private sector in 2021.

Why have the current rules been changed?

This has been introduced to simplify the tax system and alleviate the burden and time and money spent by businesses that engage contractors in determining status. 

The Prime Minister, Liz Truss, had mentioned a review of the IR35 reforms in her leadership pitch when she promised to usher in a “small business and self-employed revolution”.

What do the changes mean for GP practices?

Under the previous rules, a GP practice that engaged with a worker via an intermediary (such as a personal service company) was responsible for checking if the off-payroll rules applied.

If they applied, the fee payer was responsible for deducting the Income Tax and the employee's National Insurance Contributions from the payments made to the intermediary and also paying employer's National Insurance Contributions.

Following further changes to the rules from April 2021, once the decision was made a Status Determination Statement (SDS) had to be provided to the intermediary company. This also would include the decision and the reasons for coming to the decision.

With the reforms, it is now the responsibility of the fee-earner ( i.e. the intermediary company) to determine the status and deal with operating a PAYE system for the Tax and National Insurance on payments to the worker.

The liability and financial risk has now been transferred from the practice to the fee-earner.

I have a personal services limited company - what do these changes mean for me?

If you have a limited company that currently contracts with a public sector organisation or a mid to large private sector organisation, the responsibility for determining IR35 status is with that customer organisation.

With the changes implemented in the mini-budget, the burden of proving your IR35 status will revert to your company as the contractor.

If you as the worker are deemed to be inside IR35 your company will be responsible for dealing with the relevant tax and National Insurance contributions.