You should use the Check Employment Status for Tax (CEST) tool to find out if the individual from whom a school has ordered works, goods or services should be classed as employed or self-employed for tax purposes.
CEST
The tool provides the following determinations based on the information provided:
- employed for tax purposes for this work
- self-employed for tax purposes for this work
- off-payroll working (IR35) rules apply
- off-payroll working (IR35) rules do not apply
From 6 April 2017, legislation called “Off-payroll Working in the Public Sector” came into effect. “Off-payroll” is a definition that typically captures teachers that are paid as self-employed or through their own company, often known as a personal service company.
For years it was common for supply teachers to work on a self-employed basis. This arrangement meant it was the teacher’s responsibility, and not the school’s, to pay their NICs and Income Tax.
This legislation has moved the responsibility for paying the correct tax and NIC to the employer within the Public Sector, and this includes state schools.
To ensure compliance with the off-payroll rules, and ensure you aren’t met with an unwelcome bill from HMRC in the future, school head teachers should ensure all temporary workers (like supply teachers) are paid either through the school’s payroll, through an umbrella company, or through the payroll of a supply agency or other third party. In these three instances, the school does not open itself up to any potential liability.
The Check Employment Status for Tax (CEST) tool will provide the individual with an immediate assessment and the results page should be printed and sent to the school.
If the results page indicates self-employed, please create a supplier record on the school system prior to submission and payment of the invoice. Do not pay any
invoices unless the CEST tool has been completed.
If the results page indicates an employee, or off-payroll working, please provide a copy of the results page and seek further guidance from Schools HR Transactions Team by emailing: HRTransactions@bedford.gov.uk