Am I employed, self-employed, both or neither?
Whether you are employed, self-employed, both or neither will make a difference to the amount of tax and National Insurance contributions (‘NIC’) you pay, as well as how you pay.
You need to know which of these apply to you, so that you can comply with your tax obligations and claim tax reliefs available to you. If you are an agency worker you will find it useful to read the page on ‘Agency Workers’.
There is no straightforward legal definition of what it means to be employed or self-employed – your employment status. There is information on the issues to consider if you are unsure whether you are employed or self-employed in the ‘self-employment' section of the LITRG website. We also give more information on the following topics in that same section:
- when you are likely to be employed;
- when you are likely to be self-employed;
- what to do if you are still unsure of your employment status;
- whether you can be employed and self-employed at the same time;
- whether you can be neither employed nor self-employed;
- where you can find more information.
You may have set up a company to run a business through, for example, selling goods such as food, clothing, cars, etc. to customers. A company is a separate legal entity, but if you set the company up, you are likely to be a director and/or an employee of that company. The tax and National Insurance contributions you pay will depend on how you take your money out of the company. This might be in the form of dividends or salary, for example. The position is complex and you should take advice from a tax adviser.
If your company is not supplying goods, but services – your own services, for instance you are a hairdresser, IT contractor, care worker, teacher or labourer – there are special and complex rules which deal with the tax and National Insurance contributions position. These rules are sometimes called 'IR35'. Again, we would recommend you take advice from a tax adviser or HMRC. You can also find more information on our page ‘Agency Workers’.
If you are working through an umbrella company, you are normally treated as an employee of the umbrella company. You can read more about this on our page ‘Agency Workers’.
Please also read our factsheet for agency workers.