Self-employment vs Employment Post date: 25/04/2024 | Time to read article: 1 mins The information within this article was correct at the time of publishing. Last updated 25/04/2024 The pros and cons of working for yourselfAll doctors will be employed in the NHS at some point in their lives but there are sometimes opportunities to be self-employed – that is to effectively run your own business. This will mainly apply to those who go into private practice, GP locums (who unlike hospital locums have the opportunity to operate as self-employed rather than as an employee) and GP Partners who are self-employed individuals who go into partnership together. Employees receive a salary from their employer whereas an individual who is self-employed will be paid directly for their services and will deduct their expenses to make a profit or loss. There are a lot of differences between employees and those who are self-employed when it comes to taxation (and also the legal framework.) The table below highlights these differences (note any rates or thresholds are for the 2024-2025 tax year). EmployeesScotland or Northern IrelandEmployeesSelf-employedIncome Tax (IT)Income tax paid under the Pay As You Earn (PAYE) system via your tax codeIncome tax is paid via the Self-assessment system and the individual will need to file a self-assessment tax returnNational Insurance (NIC)Class 1 NIC is paid at 8% initially and then 2% on salaries over £50,270.Class 4 NIC is paid at 6% initially and then 2% on taxable profits over £50,270. Class 2 NIC has been phased out from 6 April 2024Payment of IT and NICDeducted by your Payroll DepartmentPaid by the individual under the Payment on Account system where payments are made in January and JulyNHS PensionDeducted by your Payroll Department unless you opt outProfits are pensionableExpensesVery difficult to make an expense claim unless it fits into a specific allowed category such as professional expenses or occupational pension (e.g. the NHS pension) expenses. Much easier to make a claim for an expense to be deducted against taxable profitsRecord KeepingRecords relating to a tax year must be kept for one yearRecords relating to a tax year must be kept for seven yearsLegal pointsEmployees are protected by their employment contract and employment law protectionSelf-employed individuals have very minimal legal protections. GP Partners may have some protection under a GP Partnership Agreement which is signed by all the partners. Share this article Share Tweet