Guidance

Employment status factsheet (ES/FS2)

Updated 5 April 2022

Are your workers employed or self-employed for tax and National Insurance contributions

This factsheet is about your workers’ employment status for tax and National Insurance contributions (NICs). For a definitive HM Revenue and Customs view, please use our Check Employment Status for Tax tool.

Check Employment Status for Tax (CEST)

The CEST is an online tool which we use to determine a worker’s employment status. We recommend you use it when you need to check your workers’ employment status.

The CEST tool is free, easy to use and can help you work out if your workers are employed or self employed in all but the most complex of cases. It will give you our view on the status for a particular engagement, provided that the information you enter is an accurate account of the work carried out.

When you use the CEST tool to determine a worker’s status, you should keep:

• the printed version of the CEST result
• the printout of the ‘Enquiry Details’ screen showing the engagement details and the replies to the questions asked
• the engagement contract where applicable
• any other documents or information you relied upon when completing the CEST

For more information, go to www.gov.uk/employment-status.

If you need help

If you have any health or personal circumstances that may make it difficult for you to deal with us, please tell the officer who has contacted you. We’ll help you in whatever way we can. For more information, go to www.gov.uk/get-help-hmrc-extra-support.

You can also ask someone else to deal with us on your behalf, for example, a professional adviser, friend or relative. We may however still need to talk or write to you directly about some things. If we need to write to you, we’ll send a copy to the person you’ve asked us to deal with. If we need to talk to you, they can be with you when we do, if you prefer.

Employment status and the law

For tax and NICs, you’re responsible for correctly determining whether your workers are employed or self employed.

The employment status of your workers is not a matter of choice. It’s an established fact based on the terms and conditions of the agreement you have with them. The contract with each worker should accurately reflect the actual terms and conditions agreed, including the genuine rights and obligations you and your worker have to each other.

The law for Income Tax, NICs and VAT does not define employment or self-employment. When we look at employment status we apply the principles established by the courts. Their principles are generally referred to as case law.

Exceptions

However, there are some special rules that do not follow case law principles and apply to certain occupations and jobs. Some apply to tax, some to NICs and some to both. These special rules can apply if:

• your work is arranged through an agency
• you are
  — a company director
  — the secretary of a club or hold any other office, in relation to your earnings from that office
  — an office or other cleaner
  — a minister of religion
  — an examiner, moderator or invigilator of an examining board
  — a diver or diving supervisor
  — a returning officer, counting officer or their staff
  — a worker who supplies their services through intermediary — IR35
  — a managed service company
  
• you work for someone in your family

For information about these, go to www.gov.uk and search for ‘Employment status guidance’.

Determining your workers’ employment status

In most cases, it will be straightforward to know your workers’ employment status. In general terms, they are:

• employed if they work for you and do not have the risks of running a business
• self-employed if they’re in business on their own account and are responsible for the success or failure of that business

Listed below are questions that will help you determine your workers’ employment status.

The same questions also apply for casual and part-time workers.

An individual worker is likely to be employed if the answer is yes to most of the following questions:

• does the worker have to do the work themselves?
• can you tell the worker where to work, when to work, how to work or what to do?
• can you move the worker from task to task?
• does the worker have to work a set number of hours?
• is the worker paid a regular wage or salary?
• can the worker get overtime pay or bonus payments?
• is the worker responsible for managing anyone else engaged by you?

Your worker is likely to be self-employed if the answer is yes to one or more of these questions:

• can the worker hire someone to do the work, or take on helpers at their own expense?
• can the worker decide where to provide the services of the job, when to work, how to work and what to do?
• can the worker make a loss as well as a profit?
• does the worker agree to do a job for a fixed price regardless of how long the job may take?

If you cannot answer yes to any of the questions above, your worker is still likely to be self-employed if you can answer yes to most of the following questions:

• does the worker risk their own money?
• does the worker provide the main items of equipment (not the tools that many employees provide for themselves) needed to do the job?
• does the worker have to correct unsatisfactory work in their own time and at their own expense?

What your workers’ employment status means for you

For each worker who is your employee, as their employer you’re required by law to account for Income Tax and NICs through the Pay As You Earn system.

There will also be other implications for you as an employer. For information about these, go to www.gov.uk/browse/employing-people.

Workers who are self-employed are responsible for looking after their own tax, NICs and any VAT affairs.

As well as tax and National Insurance, you have certain other responsibilities and obligations as someone who engages workers. For information and advice for employers, go to www.gov.uk/employing-staff.

General information

Workers

For more information about workers’ employment status for tax and National Insurance:

• go to www.gov.uk and search for ‘Employment status guidance’
• phone the Employment Status Customer Service Team on 0300 123 2326 — open from 8:30am to 4:30pm Monday to Friday (closed weekends and bank holidays)

Employers

For more information for employers:

• go to www.gov.uk/browse/employing-people/payroll
• phone the Employer Helpline on 0300 200 3200
• phone the New Employer Helpline on 0300 200 3211
• textphone 0300 200 3212 for customers who are deaf, or hearing or speech impaired

Phone lines are open from 8am to 8pm Monday to Friday and 8am to 4pm, Saturday (closed Sundays, Christmas Day, Boxing Day and New Year’s Day).

Construction industry

For more information about the construction industry:

• go to www.gov.uk/what-is-the-construction-industry-scheme
• phone the Construction Industry Scheme (CIS) Helpline on 0300 200 3210 — open from 8am to 8pm Monday to Friday and 8am to 4pm Saturday (closed Sundays, Christmas Day, Boxing Day and New Year’s Day)

Putting things right

If you’re unhappy with HMRC’s service, please contact the person or office you have been dealing with. They will try to put things right. If you’re still unhappy, find out how to complain to HMRC. Go to www.gov.uk and search for ‘Complain about HMRC’.

These notes are for guidance only and reflect the position at the time of writing. They do not affect any right of appeal.

Our privacy notice

Our privacy notice sets out the standards that you can expect from us when we ask for information or hold information about you. Go to www.gov.uk and search for ‘HMRC Privacy Notice’.