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Employed or Self-Employed - What is the Difference?

Whether you are employed or self-employed depends on a wide variety of factors.

If you are self- employed you are effectively running your own business rather than working for someone else and you will probably be working for more than one person.

If you are working mainly with one person and do not consider yourself to be running a business, then this person should be your employer.

If you are unsure about the correct employment status for you, then there is more information on the GOV.UK website.

If you are employed then your employer is responsible for paying the following:

  • Your tax and National Insurance contributions,
  • Statutory sick pay
  • Other leave entitlements (maternity, paternity etc)
  • Statutory redundancy pay

As an employee you are also entitled to:

  • minimum notice periods if your employment will be ending, eg if an employer is dismissing you
  • protection against unfair dismissal
  • the right to request flexible working
  • time off for emergencies

If you are self-employed you need to let HMRC know and register as a sole trader to receive your Unique Tax Reference number (UTR). You will be responsible for paying your own tax and National Insurance contributions and you won't be entitled to Statutory Sick Pay or other leave entitlements. However, you may still have protection for health and safety and, in some cases, protection against discrimination. You should also have rights and responsibilities set out by the terms of the contract (Agreement of Work) you have with the person you are a PA for.

You or the person engaging you as a PA may have to pay unpaid tax and penalties, or lose entitlement to benefits, if the employment status is wrong.

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