A General Overview on Self-Employment

Self-employment may be the simplest, clearest, most transparent form of business in the United Kingdom with the least amount of administration required to allow doing business in a legal way. 

Recently, however, not only people with motivations for doing business may encounter this concept, but also others who are “employed” as such, as subcontractors. 

Thus, there are cases when it is not necessarily clear whether someone is employed as an employee (PAYE) or as a self-employed. 

Answering the following questions might facilitate determining if you are categorised as self-employed based on your activities:

  • Do you have your own opinion and own say on leading your work and orders? 
  • Are you responsible for expenses, possible damages and losses, just as much as for income?
  • Do you freely decide to employ or agree with someone to work with you?
  • Do you risk your own money or funds in order to operate your business?
  • Do you provide the basic tools necessary to perform your work?
  • Can you independently decide what work you wish to perform, how, when and where, and in what form you wish to execute it or provide a service?
  • Are you working for multiple people and clients at the same time in a given year?

Furthermore, another option that helps in judging your status is to know that if you are self-employed, the general contractor may never deduct National Insurance fees from the wage earned and may only deduct taxes from people working in the construction industry, as part of the Construction Industry Scheme. 

Advantages and disadvantages of the status: 

Flexible working hours

You are your own boss

Other persons may be sent to perform the work instead of you

Usually higher hourly wages

No paid holidays

You have to take care of Self Assessment yourself

You have to pay taxes and national insurance for yourself

Unpredictable income source


For the Brave 

The English tax system does not rule out being self-employed and an employee at the same time. 

The braver ones may also be LTD shareholders and directors besides being self-employed and have a PAYE status. 

For the Brave

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