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HMRC internal manual

Employment Status Manual

Procedural aspects of status cases: general letters to individuals about chargeability as trading income

Individuals sometimes ask for a general letter confirming that their receipts are dealt with as trade income. The problem is that it is quite possible for someone who is self-employed to be engaged as an employee and it is not therefore appropriate to issue a letter in such general terms.

Where for non-tax/NICs purposes an individual seeks a statement of the amount of income which has been returned in the past, you may give details in a letter. They may need such letters where they are applying for a mortgage, local authority student grant/loan etc. You should ensure the letter includes the following reservation:

“The information provided in this letter is based entirely on the returns made by [name of individual]. Whether income is assessable as trade profits or as employment income usually depends on the terms of each particular engagement. You should also bear in mind that certain agency workers are deemed to be in receipt of earnings from an employment with the agency by Part 2 Chapter 7 Income Tax (Earnings and Pensions) Act 2003. This letter must not be taken as authority not to operate Pay As You Earn.”