Agency Nurses: What is IR35?
Gone are the days when all a nurse needs to know is how to be a great nurse.
Nowadays – and especially for agency nurses – there are a multitude of things we all need to stay aware of, in order to remain compliant with lots of different rules.
In this article we explain what on earth IR35 is and what you need to know about it.
What does IR35 stand for?
IR35 stands for Inland Revenue [press release] 35. Yep, we’re not kidding. You can read the original press release here.
When was IR35 created?
IR35 was published by Gordon Brown – then Chancellor of the Exchequer – on 9th March 1999 and came into effect on 1st April 2000.
Who governs IR35?
IR35 is governed by HMRC – formally the Inland Revenue.
What is the purpose of IR35?
IR35 was designed to tackle income tax and national insurance avoidance.
This section of the original 1999 Inland Revenue press release 35 perhaps sums up the purpose of IR35 best:
“There has for some time been general concern about the hiring of individuals through their own service companies so that they can exploit the fiscal advantages offered by a corporate structure. It is possible for someone to leave work as an employee on a Friday, only to return the following Monday to do exactly the same job as an indirectly engaged ‘consultant’ paying substantially reduced tax and national insurance.”
A brief history of IR35
From 2003 to 2017, the worker of the limited company was responsible for assessing their IR35 status under the rules and paying the appropriate National Insurance and Income Tax to HMRC.
And you can guess how most people assessed their own limited companies!
Despite this, for 14 years IR35 remained relatively untouched.
Then on 6th April 2017, new legislation was introduced in the Chapter 10 Income Tax (Earnings & Pensions) Act 2003. This made public sector organisations (eg The NHS) responsible for assessing whether an individual providing them services on a contract basis fell under IR35 rules, and for paying the National Insurance and Income tax to HMRC where relevant.
On 6th April 2021, these rules (referred to as the off-payroll working rules) were extended to apply to medium and large private sector businesses. EG private hospitals such as Spire and BMI.
In September 2022, Liz Truss’s mini-budget announced that the 2017 and 2021 reforms to IR35 would be repealed, at a cost of £6.19 billion over five years.
Sadly Liz didn’t last long.
On 17th October 2022, the new Chancellor of the Exchequer – Jeremy Hunt – announced that the repeal would not go ahead and Chapter 10 would remain in place.
Got all that??
How does IR35 affect agency nurses?
Up until 2017, agency nurses could provide their services to NHS hospitals via limited companies. After 2017 they could not.
Until 2021, agency nurses could provide their services to private hospitals via limited companies. After 2021 they could not.
PHEW! Almost at the end!
What happens if I break the IR35 rules?
HMRC can take up to twice the amount you owe – the original amount, plus interest, plus a fine. Gulp.
How can Novello help me?
In short, Novello Healthcare can’t pay you via your limited company – HMRC guidance is very clear.
However, we can make your agency journey as amazing as possible by giving you both PAYE and umbrella options.
This keeps you safe from HMRC action by thoroughly auditing our umbrella companies on a regular basis, so you don’t have to.
You’re in safe hands!
You can read more here: https://www.gov.uk/guidance/ir35-enquiry-by-hm-revenue-and-customs