August 10, 2016

Employment Status

You may think that you are able to decide whether you are considered self-employed or employed, but unfortunately, this is not the case. There are a number of factors which must be considered to determine your employment status. A Glasgow accountant can help to identify your employment status – and so make you aware of the differing tax rules for self employed people.

tax rules for self employed man

What are the Main types of Employment Status?

There are a number of different types of employment status: worker, employee, self-employed and contractor, director and office holder.

Why Do I Need to Know My Employment Status?

Under employment law, it is important to know your employment status as it is crucial in determining your rights and their employer’s responsibilities. However, it is important to understand that employment status can be different under tax law. Employment status has an impact on the way you pay tax, national insurance and some entitlements. So, here at The Kelvin Partnership can make sure that you understand and are informed about both the tax rules for self employed and employed people.

What Factors Do I Need to Consider?

It is not as simple as you may think to determine your employment status. First, you must consider a number of factors which can influence your status. The most important factors are: control; the right to get a substitute or helper to do the job; and the mutuality of obligations.

Mutuality of Obligations

“Mutuality of obligations” refers to the obligation of an employee to provide work and pay for it. This is combined with the obligation of the employee to complete the work personally. It is important to remember that an obligation is a legal requirement (this may be outlined in your contract of employment).

How Does Employment Status Affect My Rights?

Your employment status can have a huge influence on your entitlements and the way you pay tax etc.


As a worker you are entitled to a national minimum wage as well as statutory minimum level of paid holiday leave and rest breaks. You can work no more than 48 hours per week (however, the worker can opt out of this if he/she choses to do so). You are also protected against discrimination and unlawful deductions against your wages.


As an employee, you have the right to statutory: sick pay; maternity; paternity; adoption and shared parental leave. You also have the right to request flexible working, time off for emergencies and statutory redundancy pay.

Self-Employed and Contractor

In most cases, employment law doesn’t cover people who are self-employed. This tends to be the case, as you are your own boss, however, you still have protection over your health and safety and in some cases, protection against discrimination. As someone who is self employed, your rights and responsibilities are set out by the terms of their contract from their client.

These are just some of the rights associated with the main types of employment status. Your rights vary hugely based on your employment status, making it vital to correctly identify your employment status. Identifying your employment status is also vital to HMRC to ensure you are aware of the tax rules for self employed people.

How Can an Accountant Help You?

At The Kelvin Partnership, we can help establish what your employment status is to ensure that you are receiving your rights. We will make sure you know about tax rules for self employed people. This is vital information as it can influence how you pay tax, national insurance and the benefits you can receive. As employment status can vary between employment law and tax law, sometimes the lines can become blurred, and HMRC often make mistakes when determining your employment status and the tax requirements etc. which come with this. If you feel that HMRC may be wrong, then our small business accountants can argue your case, as HMRC does not have the final say.

Do you have a new business? Then you may want to read our last post about raising business finance!

If you are unsure of your employment status, or are interested in any of our small business accountant services, then get in touch to find out how we can help you.