"Can't I just ask my employee to sort out their own tax?" this is a question we're frequently asked by potential employers. Whether someone is employed or self-employed depends on the terms and conditions of their work. It is important for all employees to know their employment status as it affects employment and benefit rights, and how to pay tax and National Insurance Contributions.

It is equally important that you, as the employer, are absolutely certain whether it is your responsibility or theirs to declare tax and NI.

How to determine employment status
A worker is probably considered employed if they:

• have to do the work themself
• 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 probably 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

*Please note that these lists are not exhaustive.

The expection to the rule
It's clear to see that in most cases domestic employees do not meet HMRC's criteria for self-employment.

However in some cases HMRC do grant self-employment status to domestic workers. It's very important to remember that if you take on domestic staff who was previously self-employed they should contact the Revenue and request confirmation in writing that their status still applies in the new position.

Transfer of self-employment status between jobs is not automatic, and each situation should be considered individually. This is the employer's responsibility, and if they do not receive written confirmation from the Revenue and it later comes to light that the worker is not self-employed, then it's the employer, not the worker who will pursued for unpaid taxes. And in the eyes of the law it is a criminal offence not to declare an employee and pay tax and NI contributions on their behalf.