Am I Employed or Self-Employed?
Quick Answer
HMRC looks at the reality of how you work, not just what your contract says. If someone else controls how, when and where you work, and you can't send a substitute, you're likely employed. If you have genuine control over your work and take on financial risk, you're likely self-employed.
Key Factors HMRC Considers
- Control — who decides how, when and where the work is done
- Substitution — can you send someone else to do the work instead of you
- Mutuality of obligation — is the business obliged to offer work, and are you obliged to accept it
- Financial risk — do you provide your own equipment, correct your own mistakes at your own cost, or risk not being paid
- Integration — are you treated as part of the organisation (uniform, email address, appraisals)
Why It Matters
Your status affects how you pay tax (PAYE vs Self Assessment), whether you're entitled to employment rights like sick pay, holiday pay and pension auto-enrolment, and who's responsible for employer's National Insurance. Getting it wrong — especially being classed as self-employed when you're really an employee — can result in a backdated tax bill for you or the business engaging you.
IR35 and Off-Payroll Working
IR35 applies to people who provide services through a limited company but would be considered an employee if that company didn't exist. Where IR35 applies, tax and National Insurance are broadly calculated as if you were employed, even though you're working through a company structure.
How to Check Your Status
HMRC's Check Employment Status for Tax (CEST) tool gives an indication based on your working arrangements. For genuinely borderline situations, professional advice is worthwhile — misclassification can lead to backdated tax, National Insurance and penalties.