Government plans to tighten self-employment criteria

David McRae
16th Dec 2013

Last week the government has embarked on a consultation with a view to bringing individuals who provide their services to ‘employers’ through an intermediary such as their own limited company within the scope of PAYE.

Employment law news


Under the proposed new test, if the individual ‘is personally involved in the provision of services to another, and if he or she is subject to supervision, direction or control as to the manner in which he or she carries out his or her duties, then the payment for his or her services will be taxed as employment income’, according to the government’s consultation paper.


This is likely to significantly narrow the scope for an individual to set up their own limited company and provide their services to a third party via that limited company, whilst enjoying the benefit of being taxed as self-employed.

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