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HMRC internal manual

Tax Credits Manual

From
HM Revenue & Customs
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Eligibility - remunerative work (general): Employment schemes (Info)

A person attending an employment scheme receives payment as a reward for services. Any payment is subject to income tax and Social Security contributions and is therefore classed as earnings.

The hours spent on a scheme therefore qualify as time spent in employment and should be included when considering whether the work is remunerative work.

A person attending an employment scheme always has a contract of employment with the person or organisation paying the earnings.

Deciding whether a scheme provides employment

A person who receives earnings (that are liable to deduction of tax and Social Security contributions) will be an employee. Whereas, a person who receives a training allowance will be a trainee. Follow the guidance in TCM0124260.

If the customer is unsure if they’re an employee and it can’t be resolved by information provided by the customer, you should establish whether there’s a contract of employment.