As a general rule, a worker is:
a) employed if they work for you and don't have the risks of running a business.
b) self-employed if they're in business on their own account and are responsible for the success or failure of their business
An individual is likely to be an employee if most of the following statements apply to them:
1. You can tell them what work to do, as well as how, where and when to do it
2. They have to do their work themselves
3. You can move the worker from task to task
4. They are contracted to work a set number of hours
5. They get a regular wage or salary, even if there is no work available
6. They have benefits such as paid leave or a pension as part of their contract
7. You pay them overtime pay or bonus payments
8. They manage anyone else who works for you
Indications that a worker is self-employed:
1. They can hire someone else to do the work you've given them, or take on helpers at their own expense
2. They can decide what work is done and when, where, or how it is done
3. You pay them an agreed fixed price - it doesn't depend on how long the job takes to finish
4. They can make a loss or a profit
Even if none of the above statements applies, a person is still likely to be self-employed if most of the following applies to them:
1. They use their own money to buy business assets, pay for running costs, etc
2. They are responsible for putting right any unsatisfactory work, at their own expense and in their own time
3. They provide significant tools and equipment that are fundamental for their work
Different rules exist for certain types of work:
For some categories of work, there are different rules from the usual employment status ones for working out how tax and NICs should be deducted from their earnings.
These apply to workers who supply their services through an intermediary (sometimes referred to as IR35) and workers who supply their services through a managed service company.