From the HMRC
http://www.hmrc.gov.uk/employment-status/index.htm
As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:
* Do they have to do the work themselves?
* Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
* Can they work a set amount of hours?
* Can someone move them from task to task?
* Are they paid by the hour, week, or month?
* Can they get overtime pay or bonus payment?
If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:
* Can they hire someone to do the work or engage helpers at their own expense?
* Do they risk their own money?
* Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
* Do they agree to do a job for a fixed price regardless of how long the job may take?
* Can they decide what work to do, how and when to do the work and where to provide the services?
* Do they regularly work for a number of different people?
* Do they have to correct unsatisfactory work in their own time and at their own expense?
Most flying instructors are in reality employed.