Can You Be Self-Employed and Only Work for One Company?

Are you self-employed and only working for one company? Wondering whether you are legally allowed to do this and what the tax implications are? Then read on! There’s been a lot of attention on people who are registered as self-employed and only work for one company. Uber, Deliveroo and Pimlico Plumbers are just a few of the household names that have been under scrutiny by HMRC to establish the true employment status of their workers. In this guide, you’ll find out whether you can work for one company on a self-employed basis, the implications of doing so and who can insist on you changing your tax status.

Updated 24 September 2021

Friendly Disclaimer: Whilst I am an accountant, I’m not your accountant. The information in this article is legally correct but it is for guidance and information purposes only. Everyone’s situation is different and unique so you’ll need to use your own best judgement when applying the advice that I give to your situation. If you are unsure or have a question be sure to contact a qualified professional because mistakes can result in penalties.

1. Can You Work for a Company on a Self-Employed Basis?

It’s a fairly normal business arrangement to find people who work for companies on a self-employed basis. However, there are certain rules that HMRC put in place. This is because some employers use ‘self-employment’ to avoid tax and statutory obligations. When a company takes on an employee on payroll, they are legally obliged to:

  • Run payroll and provide a payslip;
  • Pay employers National Insurance at 13.8% of gross salary;
  • Provide holiday pay;
  • Give statutory benefits such as maternity leave and sick pay;
  • Protect employees against any discrimination relating to gender, sexual orientation religion and disability;
  • Make sure your health and safety is protected;
  • Contribute National Insurance on your behalf so you can access state benefits like child benefit or the state pension.

By taking on someone who is self-employed, a company can avoid almost all of these responsibilities. For people who are genuinely self-employed, then this is absolutely fine. But HMRC is becoming increasingly concerned that companies are using independent workers for their own benefit. This has often resulted in them exploiting the limited self-employment rights and the UK is losing out on National Insurance revenue.

2. Can You Be Self-Employed and Only Work for One Company?

Yes, in some cases individuals can legitimately be self-employed and only work for one company. For example, if they are just starting out as a freelancer and 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 may not be legitimately self-employed.

3. Are You Really Self-Employed?

The first thing you should consider is whether you are actually employed. This applies even if you are registered as self-employed. HMRC doesn’t just take a UTR number at face value. They also 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. Consequently, 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 or equipment for your work;
  • not restricted for working just that client.

If your arrangement doesn’t satisfy these rules, then you may need to be employed by the company you’re working for.

4. How to Check Your Employment Status

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 to discuss your situation.

5. 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 need to register as self-employed because you want the work. This is totally understandable, especially if you have bills to pay. Always be cautious before you accept any arrangement that you’re not totally comfortable with. You could find yourself having to report your income to HMRC, pay tax retrospectively and fill in a tax return as a self-employed individual. You may even find yourself at risk of penalties from HMRC if they discover you should have been employed but have been paid as self-employed.

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About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek and money nerd helping financial DIY-ers organise their money so they can hit their goals quicker.