Employment status matters for tax, National Insurance and, separately, for employment rights. It is decided by the reality of the working relationship as well as the written contract, so it needs careful thought at the start of an engagement, and whenever the way the work is done changes.
Where a contractor works through their own limited company, the off-payroll working rules (often called IR35) decide who is responsible for assessing status. For engagements with public-sector bodies and with medium and large private-sector clients, the client must make the determination and give the worker a status determination statement. With small private-sector clients, the contractor’s own company remains responsible. Getting it wrong can mean tax, penalties and interest for whoever is responsible.
For contractors, Anewthing reviews your circumstances, helps you set out a contract for your services, and gives a professional opinion on how HMRC is likely to view the engagement. For businesses, Anewthing reviews contracts and working practices and advises on whether the people doing work for you are likely to be treated as employed or self-employed. If a dispute arises, Anewthing can help you present your position to HMRC.
What’s included
- Reviewing contracts and working arrangements
- An opinion on likely employment status for tax purposes
- Help drafting a contract that reflects how you actually work
- Guidance on the off-payroll rules and status determination statements
- Support in employment-status discussions with HMRC
Factors that point to employment or self-employment
- Who controls how, when and where the work is done
- Whether the worker can send a substitute
- Whether there is a mutual obligation to offer and accept work
- Who provides the equipment needed
- Where the financial risk lies, and the opportunity to profit from sound management
- How the engagement can be ended
- Whether benefits are provided
- The intentions of both parties and how long the engagement lasts
How we work with you
Talk it through
Tell us what you need and how your records are kept.
Agree the scope and fee
You know what is included and what it costs before work begins.
Ongoing support
Deadlines and rule changes are raised with you before they become urgent.
Current rules at a glance
| Private-sector off-payroll rules | Medium and large clients decide status since 6 April 2021; for small clients, the worker’s company decides |
|---|---|
| Status determination statement | A client that decides status must give the worker a statement with the reasons for its decision |
| Small-company size limits | Higher limits (£15 million turnover, £7.5 million balance sheet) take effect for off-payroll purposes from 2027–28 at the earliest |
| HMRC status tool | HMRC stands by CEST results if the information entered is accurate |
Common questions
Does a status for tax purposes decide my employment rights?
No. Employment status for tax and for employment rights are assessed separately and can differ. For employment-rights questions, a specialist employment adviser or solicitor may be needed.
Is HMRC’s online status tool enough?
HMRC’s Check Employment Status for Tax (CEST) tool can be a useful starting point, but the result depends on accurate answers and it cannot capture every detail of a working relationship.