Employment Status for Tax & Off-Payroll Working
Employed or self-employed in tax terms?
Whenever you engage the services of an individual, partnership or small limited company, a decision needs to be made on when they pay the tax and national insurance for the work. This will be one of two options:
- Tax deducted at source (“employed for tax purposes”)
- Tax paid at the end of the tax year (“self-employed for tax purposes”)
This has nothing to do with employment law – they are still an external supplier.
Where a supplier is deemed as needing to paid on payroll for tax purposes, we’re required to also pay over additional amounts to cover Employer’s NI. This will affect your budget.
How do we make this decision?
To determine this, you must use the DCC Employment Status Check.
The information provided in the tool will be used by the Tax Compliance Team to decide when the tax and National Insurance will be paid on the work.
The tool can be accessed via the Employment Status Portal.
Why is it important?
It’s our legal responsibility to make this decision – we have no choice.
If HMRC audit us and discover someone has been incorrectly treated as “self-employed for tax purposes”, DCC would become liable for any tax and national insurance due, plus interest and penalties. If the incorrect decision was due to misinformation, this would be charged against your budget.
Where can I go for guidance?
Information about Employment Status and how to fill out the check can be found on the Employment Status Portal.