Employed or self-employed?

Introduction

This general guide to employment status for tax and National Insurance contributions (NICs) will help in deciding whether you are an employee or self-employed. Although it is aimed at workers, it will also be useful for those who engage workers.

Your employment status will affect how much tax and NICs you pay and how it will be collected. The type of National Insurance that you pay will affect some types of benefits, for example, whether you can receive Statutory Sick Pay when you are unable to work through ill health.

The person you work for needs to decide your correct employment status. It is their responsibility and it is important that they get this right so that you

• get the appropriate employment rights
• pay the right amount of tax and NICs, and
• have access to the correct benefits.

If you are an employee or self-employed for tax purposes then you are also likely to be regarded as having that same status for employment rights and benefits purposes. You can get further information about these issues from

• Department of Trade and Industry (for employment rights) at www.dti.gov.uk and by phoning 020 7215 5000, and
• Department for Work and Pensions (for benefits) at www.dwp.gov.uk and by phoning 020 7712 2171.

If you are employed, your employer will need to deduct tax from your pay (through PAYE) and Class 1 NICs. If you are self-employed, you are responsible for paying your own tax and NICs.

• Just because you are employed or self-employed in one job, it doesn't necessarily mean you will be in another job.