Those working in local education often have the same difficulties as people working in the corporate sector when it comes to determining their employment type. Self-employment status all centres on the difference between contracts of service and contracts for service, and these terms are often misinterpreted.
Those working in local education often have the same difficulties as people working in the corporate sector when it comes to determining their employment type. Self-employment status all centres on the difference between contracts of service and contracts for service, and these terms are often misinterpreted.
A contract of service is the same as a contract of employment and is often referred to as such, this represents the relationship, agreements and terms and conditions between an employer and employee. These can be used to appoint an employee in a variety of circumstances including temporary, permanent and fixed term.
A contract for service is essentially the opposite. It is a company to company contract, supplier to buyer between a pair of establishments with no employment connection at all.
The introduction of the IR35 legislation in 2000 made self-employment status a lot more complicated, but luckily there are a few ways of knowing your employment type:
Payslip
A self-employed person would not receive a payslip. Likewise, they would not get a P60 for their year-end figures or a P45 if they were to return to an employed position.
Tax Return
A self-employed person would have to complete their own tax return. This is their version of a P60 in effect, but as he/she doesn’t have an employer it is their responsibility to inform HMRC of the relevant figures.
Contracts
You wouldn’t get a contract of employment if you were a self-employed person. You might present the client with a quote for the work that they want carried out which they would agree to, and you might enter into a contract for services, which is not the same as a contract of service (contract of employment).
Invoice
Similarly, a self-employed person is likely to be required to provide invoices for all work carried out so that the client has receipts for all their expenditures.
If you want more information on the IR35 legislation please click here. If you are still confused about your employment status you can use HMRC’s employment status indicator by clicking here.