Locum doctors and nurses succeed in overturning unfair tax rule

Locum doctors and nurses succeed in overturning unfair tax rule
Two unions representing locum doctors, nurses and allied healthcare professionals have today succeeded in overturning a new tax rule imposed by NHS Improvement (NHSI) that risked thousands of agency workers leaving the NHS.
The Locum Doctors Union, who are supported by the Healthcare Professionals Union, an association that represents nurses and allied health care workers, threatened legal action against NHSI after it instructed NHS Trusts across the UK to apply an HMRC Rule known as IR35 to all self-employed NHS healthcare workers.
This change to the contracts of locum doctors, nurses and allied healthcare workers would have potentially resulted in the loss of between 30% to 50% of their income, because they would have been treated as employees rather than as self-employed for tax purposes.
Even though locum healthcare workers would be taxed as employed workers under the purported IR35 rule, they are still not entitled to the same employment rights that all other NHS staff receive.

Press release
30 MAY 2017 • 7:07 PM
Laura Donnelly

NHS watchdogs back down after standoff with doctors on tax rules

NHS watchdogs suggested some locum doctors were colluding to inflate pay in ways which should see them struck off

NHS watchdogs have backed down in a row with locum doctors, performing a U-turn over new tax rules.

Last month the health service regulator accused agency medics of an “organised campaign” to hold the NHS to ransom over tax changes.

The crisis stems from new rules - introduced in April - which attempt to clamp down on tax avoidance.

NHS trusts were ordered to subtract tax and national insurance from pay packets at source from workers supplied to them via agencies or personal service companies.

The regulator had said “all locum, agency and bank staff” should fall under the new tax rules, introduced by HM Revenue and Customs.

Some doctors said the changes could mean a drop in income of up to 50 per cent. But others said earnings will only be reduced if workers were paying too little tax in the first place.

In recent weeks, NHS managers said agency doctors were threatening to withdraw from shifts at late notice, unless rates of pay were increased, with some demanding a rise of as much as 56 per cent.

The watchdog, NHS Improvement, described the actions as a “very organised campaign” by doctors who were aware that hospitals could struggle to maintain safe services without them.

But the regulator has now issued new guidance, reversing previous advice. Instead trusts have been told to examine each case on an individual basis, before deciding whether agency workers are covered by the new IR35 rules.

The changes follow a legal threat from two unions representing locum doctors and nurses - the Locum Doctors Union and the Healthcare Professionals Union