Unit 1, 1.2 "Describe the key legal and taxation differences between main types of employment status."

Unit 1, 1.2 "Describe the key legal and taxation differences between main types of employment."


With the different type of employment statues that you have (described in Unit 1, 1.1), when it comes to the legal side of things (i.e pay), there are many differences for all those types of employees I spoke about before. 


Here are the following descriptions of these differences:


Full-time/ part-time employee: As a full-time or part-time employee, you are required to pay income tax, which is dependent on how much you earn a year. If your yearly income is more than £7,745  you will have to pay tax. Your employer will work out how much tax needs to be deducted - dependent on this income - using your HM Revenue and Customs tax code. 


Contracted employee/Freelancer: Being self-employed is very different to being a full-time employee. One of the major differences is that you have to pay your own tax and national insurance income, something that your employer would do. 


If you set up a limited company, this is another legal and taxation difference from the other types of employments I have spoken about.


As a limited company, you are seen as a person, so, like you would do if you were just freelancing yourself, to get paid, you send out invoices to whoever you worked for.


One of the main differences between a limited company and someone who is working full-time/part-time or is a contracted/freelance employee, is that, instead of paying income tax, you pay corporation tax. 


Unpaid worker: If you are working on a voluntary basis  you're not getting paid, and therefore won't need to pay tax or national insurance. 


Apprentice/Intern (if paid): As an apprentice, because I am earning under the minimum taxable yearly wage, I don't need to pay any tax/national insurance. The same would go for internships that are paid, as most likely, the said intern wouldn't be earning more than £7,745.