PLEASE NOTE: The charity TaxAid advises only those people on low incomes whose problems cannot be resolved with HMRC.

Employed or self-employed

Employee tax codes and National Insurance

Employment status is a question of fact, not choice. It is important to know if you are employed or self-employed for many reasons. These reasons include employment rights, such as in redundancy, and liability to pay income tax and National Insurance. In general, the self-employed are responsible for paying their own tax and National Insurance though self-assessment, whereas employees pay tax and National Insurance via their employer through PAYE.

Indications of employment status include:

  • Having a contract of employment
  • Receiving payslips showing gross pay and deductions for income tax and National Insurance
  • Receiving tax forms P60 at the end of each tax year and from P45 if you leave a job
  • The nature of the work you do, how you are supervised, the amount of financial risk you take, who provides the equipment  you need to do the work and if you can send someone else in your place

If you are unsure of your employment status you can use the HMRC on-line status checker to obtain guidance – https://www.gov.uk/employment-status-indicator. The results of this test are indicative only, when performed by an employee.

You may also need to consider Agency legislation, Personal Service Company and IR 35 issues as well as Managed Service Company questions.

There is information on these issues on the Gov.uk website:

On employment status https://www.gov.uk/government/collections/employed-or-self-employed

You may also contact the HMRC Status Customer Service Team on 03000 527450.

Disputes

If there is a dispute about your employment status, then you will need professional advice from a tax adviser. If you are on low income, you may contact TaxAid. For advice options see the taxpayer section.