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Tax reforms could lead to reduction in locums, pharmacy bodies warn

HMRC's changes to off-payroll working are due to come into force from April 2020
HMRC's changes to off-payroll working are due to come into force from April 2020

Employers may “shun” employing locums, while locums may be put off working in community pharmacy, because of ambiguous IR35 tax reforms, pharmacy bodies have warned.

Government plans to implement changes to tax law known as IR35 – or “off-payroll” working – could have a significant impact on the flexibility of the community pharmacy workforce, including discouraging locums from working in the sector, pharmacy bodies have warned Her Majesty’s Revenue and Customs (HMRC).

The changes are intended to ensure that individuals who are in essence employed when providing services are paying the correct amount of tax. From April 6, 2020, the responsibility for assigning the right tax status for a locum pharmacist will fall to their employer.

However, employers “may shun hiring workers on a temporary basis, because of the ambiguity that exists around HMRC’s definition of a true locum”, the Company Chemists’ Association (CCA), the National Pharmacy Association (NPA), the Association of Independent Multiple Pharmacies (AIMp), the Royal Pharmaceutical Society (RPS) and locum organisations Team Locum and Locate a Locum warned.

Under the current plans, locums working in community pharmacy could be mistakenly defined as “employed” for employment tax status, the organisations claimed. This would make working as a locum “untenable” because they would pay the same tax as employees, but without the same access to employee rights, the bodies stressed.

They have “significant concerns” that the changes would have a detrimental impact on the pharmacy workforce, “to the extent that it disrupts the necessary supply of medicines and services to patients”.

Businesses won’t be ready

With less than 12 months to go until the reforms come into force, “there is still much work to do” and “businesses will struggle to put the required changes in place on time”, the pharmacy bodies warned.

Malcolm Harrison, chief executive of the CCA – which represents the UK’s largest multiples and supermarket pharmacies – said: “HMRC [is] challenging the norms that have existed around the use of locums and self-employed pharmacists and everybody needs to be attuned to change.”

The pharmacy bodies advised employers and locums to read HMRC’s guide on what actions they should be taking in preparation for April 2020.

Read the pharmacy bodies' consultation response in full.

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