SELF EMPLOYED WHAT DOES IT MEAN

A person is self-employed if they run their business for themselves and take responsibility for its success or failure, Self-employed workers aren't paid through PAYE, and they don't have the employment rights and responsibilities of employees.

Someone can be both employed and self-employed at the same time, for example if they work for an employer during the day and run their own business in the evenings.

You’re probably self-employed if you:

  • Run your business for yourself and take responsibility for its success or failure
  • Have several customers at the same time
  • Can decide how, where and when you do your work
  • Can hire other people at your own expense to help you or to do the work for you
  • Provide the main items of equipment to do your work
  • Are responsible for finishing any unsatisfactory work in your own time
  • Charge an agreed fixed price for your work
  • Sell goods or services to make a profit

If you are or become self-employed you must tell HMRC.

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Self Employed Total 2019
Self Employed economy contribution 2019

SELF EMPLOYED CONTRACTORS

There is a special scheme for self-employed contractors and sub-contractors working in the construction industry called the Construction Industry Scheme (CIS).

Under the Construction Industry Scheme (CIS), contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC), this will be taken at either 20% if you are ‘registered’ or 30% if you are not.

The deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

CIS STATEMENTS (PAYSLIPS)

At least one statement must be provided by the contractor each tax month and within 14 days of the end of the tax month (a tax month runs from 6th of one month to the 5th of the next).

The statement must show the contractor's name and reference, details of the payment(s) made, the cost of any materials incurred and the deduction(s) made from the payment(s).

It is vital that you retain these statements (as well as details of your expenses) as you will need them to do your tax return.
If you do not keep adequate records or complete your tax return correctly or on time, you may have to pay a penalty.

Self Employed construction workers total 2019
Self Employed age distribution 2019
Self Employed gender distribution 2019

EMPLOYMENT RIGHTS

Employment law doesn't cover self-employed people in most cases because they are their own boss.

However, if a person is self-employed:

  • they still have protection for their health and safety and, in some cases, protection against discrimination.
  • their rights and responsibilities are set out by the terms of the contract they have with their client.

AS A CONTRACTOR/END CLIENT
... WHAT IF WE'VE BEEN TOLD THE WAY WE ARE DOING THINGS IS FINE?

If you are using Self-Employed people direct you should be:

  • Undertaking a Compliance check on every person prior to their start
  • You must check their Right to Work
  • You must verify their Self-Employed Status with the HMRC
  • They should be working on a price
  • They should provide you with Public & Employers Insurance at the required financial levels prior to starting on site e.g. £10m/£10m/£5m

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