Employment Tax

Employment status ― why it matters

Produced by Tolley and written by Anne Redston
  • 21 Dec 2021 16:40

The following Employment Tax guidance note Produced by Tolley and written by Anne Redston provides comprehensive and up to date tax information covering:

  • Employment status ― why it matters
  • Gross or net
  • Rates and structure of NIC
  • The self-employed
  • The employed
  • The consequence
  • Expenses
  • Statutory payments
  • Statutory sick pay
  • Statutory maternity pay
  • More...

Employment status ― why it matters

Anne is a barrister who sits as a judge of the First-tier Tax Tribunal. The commentary in this guidance note is her personal view as she is not authorised to write on behalf of the Tribunals Service or the judiciary.

This note sets out the main differences between employment and self-employment. It discusses the timing of payment, national insurance contributions (NIC), expenses, statutory payments, leave entitlements and (briefly) employment rights. It does not cover those who work through agencies (for which, see the Agency workers guidance note).

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

Remember that this note and the other notes on employment status are only a summary, and do not cover all situations. You may need to take further advice. For the position of those working through personal service companies and the IR35 rules, see the Personal service companies ― overview guidance note.

This guidance note, and the other related guidance notes on employment status, sets out the position before the coronavirus (COVID-19) pandemic. However, there have been various measures introduced to help employers and employees affected by the coronavirus pandemic. You are strongly advised to read the Coronavirus (COVID-19) and Employment Taxes ― overview guidance note, as that commentary summarises

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