Employed or Self-employed?

The 2017 Spring Budget brought into view areas of disparity in the UK’s tax system for taxing earnings from work. One of these areas which has been under review for many years and by many governments are the rule of contractors.

For some years it’s been argued that certain contractors are not self-employed, whether as individuals or through their own companies, but are in fact employees of the business they contract with and therefore should fall within the scope of PAYE.

The rules have changed for contractors working specifically under contract with Public Sector Bodies and some of these contractors will be surprised to find themselves paying PAYE tax and Class 1 NIC from 6th April 2017.

The new rules put the responsibility on the Public Sector Body to take the decision as to the employment status of the contractor. For ease, the contractor is being put “on the books”. This may or may not be the correct decision based on the nature of the contract but could be an issue for a contractor if they do not challenge an incorrect decision. HM Revenue and Customs (HMRC) could potentially claim there are grounds to suggest the contractor had always been an employee and therefore prior years may be reviewed.

If you are a self-employed individual or work through your own Personal Service Company and are contracted to a Public Service Company and are contracted to a Public Sector Body, you may wish to have your contract reviewed by one of our experts to ensure the nature of your contract is correct and your engagement can continue in it’s current form.

Contact us on 01484 685413 or email flourish@balanceonline.co.uk