An independent contractor in the UK is a self-employed worker or sole trader that runs their own business and is responsible for its success and failures. They are not paid through the PAYE (Pay As You Earn) system and do not have the same rights and responsibilities as an employee.
In the UK, you can be both employed and self-employed at the same time. (i.e. You work for an employer during the day and run your own business after office hours).
The UK would consider you self-employed if:
Significant Factors:
- You can decide how, where, and when you do your work.
- You have several clients at the same time.
- You provide the main items of equipment to do your work.
- You submit invoices to clients after work has been completed.
- You operate under a contract for services or consultancy agreement that uses the terms ‘self-employed’, ‘consultant,’ or an ‘independent contractor.’
Other factors:
- You sell goods or services to make a profit.
- You put in bids or give quotes to get work.
- You charge an agreed fixed price for your work.
- You are in charge of paying your taxes and National Insurance.
Once you have established your employment needs, ensure you have determined what structure is best for your business for tax purposes, hiring needs, and future growth. There are several business structures with varying benefits, see the most common ones: sole trader and PLC to determine which is best for you and how to register.