Healthcare staffing has changed a lot over the last few years. Many private healthcare providers and NHS organisations now rely on locums and self-employed professionals. This is to fill gaps in their workforce. It definitely offers flexibility. It also helps cover staff shortages. And in many cases, it keeps services running smoothly. But there is one area that still causes confusion: IR35. Let us break down exactly what an IR35 medical practice UK setup looks like today. You’ll get to know everything medical practices need to know about IR35, including: Why IR35 Matters for Medical Practices The Step-by-Step Compliance Checklist for Practices Does IR35 Apply to Every Locum Doctor? And much more… Let’s get into it! What is IR35 in Healthcare? IR35 is a piece of UK tax legislation. It is formally known as the Off-Payroll Working Rules. IR35 targets individuals who act like regular employees but bill for their services through a limited company (often called a Personal Service Company or PSC) to pay less tax. Basically, it is designed to identify “disguised employees”. The legislation asks one core question: if the limited company did not exist, would this person actually be an employee? If the honest answer is yes, they fall inside IR35. That means their income gets taxed like employment income. The company structure they use does not matter. Managing this properly is important for any IR35 medical practice UK firm. For a long time, it was up to the contractor (in our world, the locum doctor) to make that call themselves. Not anymore. Why IR35 Matters for Medical Practices An IR35 medical practice UK operation frequently engages a wide range of professionals. These include locum doctors, practice managers, consultants, specialist clinicians, pharmacists, dentists, IT contractors, and healthcare administrators. Many of these professionals operate through limited companies. That is where IR35 becomes relevant. If an IR35 medical practice UK employer hires someone through a personal service company, it may need to determine whether the engagement falls inside or outside IR35. Remember that the consequences of getting this wrong can be significant. Who Is Responsible for IR35 Decisions? The answer depends on the size of the organisation hiring the contractor. Small Medical Practices A small organisation is generally one that meets at least two of the following: Small Company Threshold 2026/27 Annual turnover £15 million or less Balance sheet total £7.5 million or less Employees 50 or fewer If a strictly private, non-NHS medical practice qualifies as small, the contractor’s limited company is responsible for determining IR35 status. This setup is common across the IR35 medical practice UK landscape for smaller clinics. Medium and Large Medical Practices If the practice does not qualify as small, responsibility shifts to the organisation engaging the contractor. Every medium or large IR35 medical practice UK firm must handle these assessments directly. The practice must: Assess employment status Issue a Status Determination Statement (SDS) Explain the reasons for its decision Maintain appropriate records This is particularly important for larger healthcare groups. And also for private medical organisations. Practices must take reasonable care when making IR35 determinations. Blanket decisions, failing to review contracts, or ignoring the actual working arrangements may invalidate the determination and leave the practice liable for unpaid tax and National Insurance. The Three Pillars of Tax Status Determination How does HMRC decide if a worker is genuinely self-employed or a disguised employee? Well, they decide it by looking past your written contract. They look closely at the daily reality of the working relationship. When reviewing an IR35 medical practice UK arrangement, you must evaluate three core tests. 1. Control and Direction Who decides how the work is done? A genuinely self-employed consultant is hired for their expertise. They manage their own clinical approach. If your practice dictates their specific hours, forces them to follow strict internal non-clinical protocols, or supervises them like standard staff, HMRC views this as high control. High control means the role is inside IR35. This rule applies to every single IR35 medical practice UK audit. 2. Personal Service and Substitution Can the worker send someone else to do the job? This is the ultimate test. A true business-to-business contract allows for a “substitute.” If an IR35 locum doctor cannot make it to a shift, can their limited company send another equally qualified doctor in their place? If your practice can reject any substitute because you only want that specific individual, the contract requires personal service. This points directly inside IR35. 3. Mutuality of Obligation (MOO) Is there an ongoing expectation of work? In a normal employment relationship, the employer must offer work, and the employee must do it. For an IR35 NHS contractor, there must be no ongoing obligation for the practice to offer further shifts, nor for the contractor to accept them. If you put a locum on a rolling, permanent Friday rota for months on end, this may indicate ongoing mutuality of obligation. Check Out: How to Handle Payroll for Healthcare Staff? Summary Comparison of IR35 Status Factors Status Factor Inside IR35 (Employee Status) Outside IR35 (Self-Employed Status) Control Practice dictates specific hours, tasks, and non-clinical methods. Workers have high autonomy over how they deliver the medical service. Substitution Only the specific doctor or nurse can show up for the shift. The worker’s company can send an alternative qualified professional. Mutuality (MOO) Rolling, long-term rota with expected ongoing weekly hours. Ad-hoc shifts, clear end dates, no obligation to offer or accept work. Financial Risk The worker takes no financial risk and uses all clinic equipment. Workers cover their own insurance, training, and pay for professional indemnity insurance, training, subscriptions, or correct work at their own cost. The Step-by-Step Compliance Checklist for Practices To keep your practice safe this year, you need a repeatable process for every single non-salaried worker you engage. A comprehensive approach saves an IR35 medical practice UK from costly compliance errors. Step 1: Identify the Contracting Party Check how you are paying the worker. If they are a sole trader, standard self-employment rules apply. IR35 …