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Are you a freelance copywriter or an employee?

tax manIf you’re a freelance copywriter, you might think this is a stupid question. But there’s a good reason for asking. And that’s because the tax man’s interpretation of your status might not be quite the same as yours.

Firstly, it’s worth knowing why it matters. If a company has employees it has to pay employer’s National Insurance contributions, and it has all sorts of other legal and financial obligations. But if a company hires a freelancer, there is no employment law to worry about and they can save money.

Good plan, eh? But you have to remember that employment law is there to protect the workforce. For example, freelancers don’t get sick pay. If they want a break, there’s no paid leave while they sun themselves on the Costa Del Hols. Freelancers are not protected by minimum wage legislation and can be hired and fired at will.

Because of the financial savings and lack of red tape, many unscrupulous companies class people as freelancers when they are actually employees. This is a popular scam. So, HMRC has set criteria which are used to determine a person’s employment status.

Although not definitive, answering yes to the following questions might help you determine whether you are legally classed as a freelancer.

  • Can you decide where, when, and what hours you work?
  • Do you provide your own equipment (e.g. PC, printer, etc)?
  • Do you supply your own materials needed to work on outsource projects (paper, printer cartridges etc)?
  • Do you work at a fixed rate per hour or by project, regardless of how much time you spend on the job?
  • Do you invoice your clients for your work?
  • Do you regularly work for other people / other companies?
  • Do you have the freedom to engage other workers to help you with projects if you desire / if necessary?
  • Do you make any amendments or corrections to your work in your own time and at your own expense?
  • Are any financial risks associated with running your freelance business your liability?

If your answers are no, then you could be classed as an employee. And if that’s the case, you will be entitled to all the protection that employment law gives you. It’s important to stress we’re not employment experts. If you are in any doubt about your status, we recommend you take professional advice.

It’s worth visiting the HMRC website too. You’ll find an Employment Status Indicator (ESI) tool there. This is a questionnaire which will help determine your official status. And because it’s anonymous, you don’t have to worry about your ‘employer’ or anyone else finding out about your enquiry.

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