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An employee is a person who works for a company on an employment contract.

If you’re an employee, your contract should show the following pieces of information:

  • How much you get paid
  • What hours you are expected to work
  • How many days a year you get as paid holiday
  • What your employer will pay you when you’re sick
  • How long the notice period is

How to check your employment status

Not everyone who works for a company is an employee. A company may hire a freelancer or subcontractor instead. In recent times with the rise of companies like Uber, Deliveroo and more, the employment status of various workers has been brought into question. As an employee, a company has to pay employer taxes and pay for benefits like holiday pay or sick pay. As a worker, you’re freelance and sort your taxes yourself. 

If you’re not sure where you sit, here’s what makes someone a worker rather than employee:

  • You decide when, where and how you work
  • You pay your taxes via a tax return
  • Your hiring manager can replace you if you’re not available to work

In case you’re still not certain, you should check with your employer, to be safe!

How you pay tax if you’re an employee

Usually, your Income Tax and National Insurance contributions will be deducted from your salary and sent to HMRC by your employer. This tax payment system is called Pay As You Earn (PAYE). But in some cases, you might need to file a Self Assessment tax return with HMRC as well. Here are the scenarios where this might be the case:

  • Untaxed side income, such as from freelancing, renting out a property, income from savings, investments and dividends, or foreign income
  • You’re claiming a tax relief or paying the High Income Child Benefit Charge
  • You earn over £150,000 (until the 2024/25 tax year, from which point you no longer need to file)
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