Employment law has developed to acknowledge that some individuals are not self-employed or employed, but are “workers” with some limited employment rights. In tax law there are still only two statuses: employed or self-employed. If an individual is a worker for employment law they are likely, but not necessarily, they will be self-employed for tax purposes.
The key tests for employment status for tax purposes remain:
Control – the payer has a right to control the work methods of the individual
Personal service – the individual must do the work themselves
Mutual obligation – there is an ongoing relationship
If these characteristics are present then the relationship is employment. Otherwise it is self-employment. The problem is these tests are neither clear not definitive. There is constant revision as to what these tests mean and the importance of other factors such as a business-like approach to work. More details are on our employment status factsheet. The government are currently consulting and may introduce a statutory employment test, until then there will be ongoing uncertainty for many people as to their employment status.