Employment status—why it matters
Produced in partnership with Anne Redston

The following Tax practice note produced in partnership with Anne Redston provides comprehensive and up to date legal information covering:

  • Employment status—why it matters
  • Gross or net
  • Rates and structure of NICs
  • The self-employed
  • The employed
  • The consequence
  • Expenses
  • Statutory payments
  • Statutory Sick Pay (SSP)
  • Statutory Maternity Pay (SMP)
  • More...

Employment status—why it matters

Coronavirus (COVID-19): in light of the coronavirus crisis, the government announced temporary measures to support both the employed and the self-employed. For more detail on the support for the employed, see Practice Note: Coronavirus Job Retention Scheme (extended version 1 May to 30 September 2021), and for more detail on the support for the self-employed, see Practice Note: Self-Employment Income Support Scheme.

This Practice Note has been written by Anne Redston, Barrister. It is her personal view; she is not authorised to speak for the Tribunals Service or the judiciary.

This Practice Note sets out the main differences between employment and self-employment. It discusses the timing of payment of income tax, National Insurance contributions (NICs), expenses, statutory payments, leave entitlements and (briefly) employment rights. It does not cover those who work through agencies (for which, see Practice Notes: Onshore employment intermediaries—income tax provisions, Onshore employment intermediaries—key practical considerations and Offshore employment intermediaries—income tax provisions and key practical considerations).

From the individual’s perspective, employment status matters because it determines the income tax and NICs on the individual’s earnings, as well as his/her statutory rights. From the engager’s perspective, miscategorisation may trigger PAYE and NICs assessments as well as claims for employment rights and/or statutory payments. Getting employment status wrong can be very expensive.

This Practice Note, and the other Practice Notes on employment status, are only

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