We are often asked if domestic staff can be self-employed and therefore sort out their own Tax and National Insurance.
There are advantages and disadvantages to hiring a self-employed person to do a job versus employing somebody directly. Obviously if somebody is self-employed you do not have to sort out their payroll, tax and national insurance, etc. Nor are you responsible for their pension, health and safety at work, and so on. However you also have less control over their work and they may not always be available to you as they will probably work for other clients as well.
Under HMRC rules a worker is considered 'employed' if they:
- have to do the work themselves
- can be told at any time what to do, where to carry out the work or when and how to do it
- work a set amount of hours
- can be moved from task to task
- are paid by the hour, week or month
- can be paid overtime or receive bonus payments
A worker is considered 'self-employed' if they:
- can hire someone else to do their work or engage helpers at their own expense
- risk their own money
- provide the main items of equipment needed to do their job, not just the small tools that many employees provide for themselves
- agree to do a job for a fixed price regardless of how long the job may take
- can decide what work to do, how and when to do the work and where to provide the services
- regularly work for a number of people
- have to correct unsatisfactory work in their own time and at their own expense
NB. Please note that these lists are not exhaustive.
If you hire somebody who is self-employed please ask to see evidence that they are, because if they have not been granted self-employed status and HMRC find out that you are employing them, you will be liable for unpaid tax, national insurance and fines.
10 December 2015