About self-employment
What is self-employment?
Whether you work for yourself or whether you're hiring contractors, the Inland Revenue will decide whether it's happy for somebody to be considered self-employed depending on the relationship with the client.
The distinction is important for deciding whether the individual should be taxed and a deduction made for National Insurance at source (ie when you are paid weekly or monthly) and if employers national insurance should be paid.
This also this affects what expenses may be deducted from the individals pay.
These are some of the indicators of self-employment:
- No control by another over the way the work is done;
- The right to get a substitute to do the job;
- Provision of own tools/equipment;
- Bears financial risk;
- Parties agree self employment
- Free to decide when work is done
- Method of payment - quote fixed price for specified task
- Customer can withhold payment until work performed:
- No tax or National Insurance contributions deducted from payments;
- No right to employee benefits;
- No rights of dismissal apply;
- Not part and parcel of the organisation;
- Not working exclusively for one organisation.
These are some indicators that you're employed:
- You do not risk your own money and there is no possibility that you could lose money on the job
- You are paid by the hour, day, week or month
- You have no business organisation (such as premises, materials or workers)
- You supply only your own small tools
- The person you are working for has the right to tell you what to do, and where and when, even if this rarely happens in practice.
For more information, see Inland and DSS booklet IR 56/NI 39 or contact us.
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This tip sheet is provided to you completely free of charge but if you would like further information please call us now to arrange a meeting.