PT29 Employed or Self Employed?

Question 1

An employee is hired under
a self employed person is hired under

Answer 1

a contract of service
a contract for services

Question 2

Responsibility for determining the correct status rests with….

Answer 2

the business which engages the services of the worker

In cases of doubt, an engager can either ask the local HMRC Status Inspector for an opinion or use the ‘Check employment status for tax’ service on the HMRC website.

Question 3

Differences in treatment between employees & self employed…

Answer 3

Employees
Employment income
Class 1 NICs (expensive)
PAYE
Tough expenses test
Occupational pension
No VAT requirements
Employment law protection

Self-employed
Trading income
Class 2 and 4 NICs (cheaper)
Self-assessment
Easier expenses test
Personal pension
VAT registration
Less legal protection

Question 4

Four factors must be present in a relationship for it to be a contract of service.
They derive from the Ready Mixed Concrete case.

They are:

Answer 4

• Mutuality of obligation.
• Wage paid to the worker (and not a third party).
• Personal service.
• Control.

Question 5

The other factors to be taken into account in determining whether a worker is employed or self-employed include:

Answer 5

• Degree of integration into the organisation.
• Provision of own equipment.
• Basis of payment.
• Financial risk.
• Opportunity to profit.
• Business organisation.
• The number and length of engagements.
• The name of the contract and position of the parties.