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Q: The company has two partners / owners and two employed staff. Our wage is a 25 per cent cut of monthly profit. The company pay NI and Tax for two employees. Would it be better for employees to be self employed and pay their own NI/Tax so company does not pay NI and Tax?

May 25 2011

Answered by: Clive Lewis Ask a question

HM Revenue & Customs sets down strict rules for defining whether people are employees or self employed. Businesses trying to avoid paying Income Tax or National Insurance can face heavy penalties if found out.

You can find out about the criteria HMRC applies at http://www.hmrc.gov.uk/working/intro/empstatus.htm

If you have any doubts about your staff’s status you should talk to a chartered accountant.

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