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What factors determine employment status?

28 January 13 | By: Jas Jhooty

HMRC employment status enquiries are becoming more and more prominent. It is no wonder with the amounts of PAYE and Class 1 NIC at stake. This remains a particularly grey area of employment taxes with no specific legislation to differentiate between someone who is an employee and someone who is self-employed. Instead, over the years a number of factors have been tested in the law courts to provide a list of questions that must be answered to determine an individual’s employment status. These include: -

  • Is the service of a personal nature?
  • Is there a mutuality of obligation?
  • What degree of control does the engager have?
  • Has the worker the right to substitute their work to someone else?
  • Does the worker provide their own equipment?
  • What is the degree of financial risk/ opportunity to profit enjoyed by the worker?
  • Does the engager provide Benefits-in- Kind to the worker?
  • Is the worker part and parcel of the organisation?

All of these answers result in an overall picture of the type of relationship between the worker and the engager. For help on any employment status matters please do not hesitate to contact us.


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