- NHS Improvement says trusts have been asked to pay higher rates to agency workers to “offset their tax losses”
- Under new rules, agency workers must pay the same level of tax as substantive employees
- Changes will affect interim senior managers, locum doctors and other agency staff who set up personal companies to be paid through
Some NHS trusts have been asked to pay higher rates by interim senior managers, locum doctors and other agency staff to compensate for new tax rules.
Under new Treasury rules, which come into force next month, “off payroll” workers in the public sector will be forced to pay the same level of tax as substantive employees. NHS providers will be responsible for ensuring the correct tax rates are applied.
The changes will affect interim managers, locums and agency staff who set up personal companies to be paid through, which allow them to limit their tax liability.
In an email to trusts, seen by HSJ, NHS Improvement said: “We have received reports of trusts being asked to pay higher rates to agency workers to offset their tax losses.
“There should be no increase in rates paid by trusts for agency staff as part of this change in legislation. Trusts are encouraged to actively resist any proposed increases to rates charged by agencies.”
NHS Improvement believes the majority of agency workers use personal service companies, and many avoid paying as much tax as substantive employees.
It has “strongly encouraged” trusts to pay people via pay-as-you-earn tax, and said trusts must now seek approval from the regulator if they wish to pay workers through personal companies.
The email, sent last week, included forms that trusts must complete to get agreement to pay staff through personal companies. These must be “signed off by a finance/HR director and supported by an executive board member”, the email said.
A NHS Improvement spokesman said: “We don’t expect the new IR35 tax changes to result in agency staff prices going up; on the contrary, we hope it will underline to agency staff the benefits of coming back into the NHS on permanent contracts. However, we have asked trusts to get in touch with us if they see evidence of prices being raised in this way; something we would support trusts to resist and look into.”