Is a contractor an employee?
The contractor vs employee distinction is crucial for UK tax compliance, as HMRC's IR35 rules determine whether contractors must pay employment taxes or can benefit from corporation tax rates, significantly impacting take-home pay and affecting how single director limited companies structure their accounting and business operations.
Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.
If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person. With IR35 considerations, contractors may need to consider whether they're operate within an Umbrella company or as their own limited company.
To learn more you can use one of our calculators to find the differences in take home pay.
Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.
If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.