There’s a lot of attention going on for people who are self-employed and only work for one company in 2020.
Uber, Deliveroo and Pimlico Plumbers are just a few of the major names that are under scrutiny by HMRC. And this is having an effect on people who rely on them for their income under the badge of being self-employed.
So if you have concerns, then here’s what you need to keep in mind.
Should You Be Concerned if You Are Working for a Company on a Self-Employed Basis?
When a business takes on an employee they are legally obliged to:
- Run payroll;
- Pay employers national i
nsuranceat 13.8% of gross salary;
- Give paid holiday allowances;
- Provide benefits such as maternity leave and sick pay.
When you go self-employed, all these things become your responsibility.
That means if a company can take people on who are self-employed basis rather than employed they avoid a lot of obligations.
For people who are genuinely self-employed, then this is absolutely fine.
But HMRC is becoming increasingly concerned that Companies are using self-employed arrangements with staff and that means workers rights are not being protected and the UK is losing out on National Insurance revenue.
That means if you are working for someone on a self-employed basis but feel you are in effect an employee, then you should keep abreast of what HMRC are doing. Your rights may be changing.
Of course, this will mean you are no longer self-employed and won’t be able to claim for expenses against your taxes.
Can You Be Self-Employed and Only Work for One Company?
Yes, in some cases you can.
If you are just starting out on your own, then it is perfectly possible that you are self-employed but working for one Company while you are searching for new clients.
However, if you are in an arrangement where you have been with a Company for some time, have no plans to look for more work or have a contract that prevents you from working elsewhere then you should be aware of the rules.
Are You Self-Employed?
The first thing you should consider is whether, even though you are registered as self-employed, you are actually employed.
HMRC don’t just take a UTR number at face value, they look at the true nature of your engagement and beyond any paperwork like invoicing.
They have certain rules to determine whether you are self-employed or employed.
You are considered self-employed if you’re:
- in business for yourself, are responsible for the success or failure of your business and can make a loss or a profit;
- able to decide what work you do and when, where or how to do it;
- able to hire someone else to do the work;
- responsible for fixing any unsatisfactory work in your own time;
- your client agrees a fixed price for work – it doesn’t depend on how long the job takes to finish;
- using your own money to buy business assets, cover running costs, and provide tools and equipment for your work;
- not restricted for working just that client.
If your arrangement doesn’t satisfy these rules, then you should probably be employed by the Company you’re working for.
Checking Your Employment Status Online
HMRC have an online tool that helps you to check your employment status if you are self-employed and working for a Company.
Alternatively you can call HMRC on 0300 123 2326.
What Rights Do the Self-Employed Have?
Employment rights only apply to people who are employed. Self-employed people work for themselves and are therefore not employees.
That means the rights of someone who is self-employed can be limited. Some of the rights they have include:
- Discrimination relating to gender, sexual orientation religion and disablity;
- Holiday pay if they are an agency worker;
- Health and safety;
- State benefits like child benefit or the state pensions.
Can a Company Make you Go Self-Employed?
Legally a Company cannot make you go self-employed. But in reality, you can feel pressurised into accepting an arrangement where you are self-employed because you want the work.
Which is totally understandable, especially if you have bills to pay.
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Updated 4 February 2020