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Wednesday, 3 October 2023

Work out if you're employed or self-employed

Whether you're employed or self-employed depends on the terms and conditions of your work. It's important to know your employment status because it affects employment and benefit rights, and how you pay tax and National Insurance.

Employment status: basic checks to help you decide

You can usually work out your employment status by asking a few straightforward questions.

You are probably self-employed if you:

  • run your own business and take responsibility for its success or failure
  • have several customers at the same time
  • can decide how, when and where you do your work
  • are free to hire other people to do the work for you or help you at your own expense
  • provide the main items of equipment to do your work

You are probably employed if you:

  • have to do the work yourself
  • work for one person at a time, who is in charge of what you do and takes on the risks of the business
  • can be told how, when and where you do your work
  • have to work a set amount of hours
  • are paid a regular amount according to the hours you work, and get paid for working overtime - even if you do casual or part-time work, you can still be employed

You can also be employed and self-employed at the same time, perhaps by working for an employer during the day and running your own business in the evenings. Think about each contract separately - you may find that you are self-employed for one but employed for another.

There's no legal definition of employment or self-employment, so if there's doubt about someone's employment status the decision is made by referring to previous judgments - known as 'case law'. Whether you are employed or self-employed depends upon the facts of your working arrangements, what your contract says, or a combination of both.

Employment status: more help

If, after reading the guidance above, you're still unsure about your employment status you can use HM Revenue & Customs (HMRC) online Employment Status Indicator tool to help you decide by following the link below. It's free, easy to use and will help you work out whether you are employed or self-employed in all but the most complex cases.

If you need more help contact the Taxes Helpline on Tel 0845 3000 627. Lines are open from 8.00 am to 8.00 pm, Monday to Friday, and from 8.00 am to 4.00 pm on Saturday.

If you are self-employed

You are responsible for your own tax and National Insurance contributions. This means telling HM Revenue & Customs (HMRC) about your income by filling in a Self Assessment tax return.

You should register for tax and National Insurance with HMRC as soon as you start working for yourself. If you delay registering, you may have to pay penalties.

Follow the link below to find out how to register for Self Assessment to get a tax return if you are self-employed.

Depending on what type of National Insurance contributions you pay, you may lose the right to certain benefits, statutory payments, employment rights and the additional State Pension.

If you are employed

If you are employed your employer is responsible for deducting and paying your tax and National Insurance contributions through the PAYE (Pay As You Earn) system.

You are also entitled to certain rights and benefits, such as maternity or paternity leave, sick pay, Jobseeker's Allowance if you lose your job and a State Pension (including the additional State Pension) when you retire.

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