More than one job
If a worker has:
- more than one job
- works for a number of different people for a few days or weeks at a time
it is necessary to answer the questions for each job.
If the worker provides services to many people, and does not work regularly for one person to the exclusion of others, this may affect whether the work for each is as an employee, or as a self-employed person.
Just because a worker is self-employed in one job, doesn’t necessarily mean he or she will be self-employed in another job. Equally, if a worker is employed in one job, he or she could be self-employed in another.
A worker could even be an employee and self-employed at the same time. For example, he or she could
- be employed as a part-time shop assistant and spend the rest of their time running their own business from home
- or work full-time as an employee at a company, and run a part-time business in the evening or weekends
The worker may have a number of casual or part-time activities, and may be an employee in some and self-employed in others. It all depends on the facts.
Tax and NICs law does contain some special rules that apply to certain categories of worker in certain circumstances. These include:
- Agency workers.
- Divers and diving supervisors.
- Office and other cleaners.
- Employment of person by spouse.
- Employment of person by relative in private dwelling house.
- Lecturers, teachers, instructors etc.
- Examiners, moderators, invigilators.
- Returning officers, counting officers and their staff.
- Workers who supply their services through intermediaries – IR35.
- Managed service companies.
Tax and NICs
Tax is charged on employment income and “employment” includes:
- any employment under a contract of service,
- any employment under a contract of apprenticeship, and
- any employment in the service of the crown.
Income from an office is also charged as employment income.
Class 1 (and class 1A) contributions are payable by employed earners (and by employers) and class 2 and 4 contributions are payable by self-employed earners.
An employed earner is a person who is gainfully employed in Great Britain or Northern Ireland either under a contract of service, or in an office with income chargeable to income tax as employment income.
Employer””s obligations (worker””s employment status)
It is a general requirement that those wishing to take on workers consider the terms and conditions of a particular engagement to determine whether the worker is an employee or self-employed. If these requirements are not met it creates unfair competition between those businesses that meet their responsibilities and those that do not. It also creates unfairness where, for instance, two workers engaged on the same project and performing the same tasks for separate businesses are not paying the same tax and NICs due to the incorrect classification of one of them.
You can ask your local Status Inspector for an opinion as to the employment status of your workers.
Alternatively you can obtain a HMRC ””view”” of the employment status of your workers by using the Employment Status Indicator (ESI) tool. Provided the answers given to the ESI questions accurately reflect the terms and conditions under which the services are provided at the relevant time of the contract, HMRC will be bound by the ESI outcome where the engager or their authorised representative provides copies of the printer-friendly version of the ESI Result screen, bearing the 14 digit ESI reference number, and the Enquiry Details screen. You should also retain a copy of the written contract (if available) in relation to the engagement which the print-out refers along with any other documentation you relied on when completing the ESI.
Worker””s obligations (own employment status)
Your employment status for tax and NICs purposes will depend on the terms and conditions of your contract with the engager.
If you work under a contract of service (employment), the employer will be responsible for operating PAYE and accounting for tax and NICs.
However, if you work under a contract for services (self-employed), you will be responsible for registering as self-employed and for completing a Self Assessment.
You can obtain a HMRC ””view”” of your employment status by using the Employment Status Indicator (ESI) tool. However, this will provide a general guide only which would not be binding on HMRC.
Where an agency, usually a recruitment agency, supplies a worker who is not an employee of the agency, to another person, it is possible that special rules might apply with the result that the agency has an obligation to operate PAYE and account for Class 1 NICs.
You can ask your local Status Inspector for an opinion as to whether the tax and NICs agency legislation applies to any of your workers under CAP1.
It is our job to ensure that individuals pay tax and NICs on the right basis at the right time. Our aim is to get employment status right.
Our Status Inspectors may be able to express an opinion on employment status in accordance with CAP1.
As part of our compliance activity we may wish to check that a person””s employment status has been correctly classified. We seek voluntary compliance, but, where we find that the incorrect classification has been applied, we have a duty to ensure things are put right, both for the past and for the future. If someone does not agree with our decision, he or she has the right to appeal – How to appeal against an HMRC decision – direct tax.
Help and advice on employment status issues for tax and NICs is available by phoning 0845 3000 627.
For a HMRC ””view”” of your employment status or that of your workers use the Employment Status Indicator (ESI) tool.
Employment rights and benefits entitlement
The fact that a person is found to be an employee for tax and, or NICs purposes does not necessarily lead to the conclusion that he or she is an employee for other purposes. Information about employment rights and entitlement to benefits are available at Department of Trade and Industry and Department for Work and Pensions respectively.
Source: HMRC, © Crown Copyright, Open Government Licence