Employment status ― why it matters

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Employment Tax

Guidance

Anne is a barrister who sits as a judge of the Upper Tribunal (Tax and Chancery Chamber) and 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). In addition, some of the tax rates and bands set out below may not apply to Scotland.

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

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Anne Redston

Barrister

Anne Redston is a barrister and consultant editor of Tolley's Yellow Tax Handbook. She is also a judge of the Upper Tribunal (Tax and Chancery Chamber), the First-tier Tax Tribunal and the Social Entitlement Tribunal. She is a Chartered Accountant and Chartered Tax Adviser, and a Fellow of both Institutes.

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