The following is an extract from the HMRC web site

In order to answer this question it is necessary to determine whether the person works under a contract of service (employees) or under a contract for services (self-employed, independent contractor). For tax and NICs purposes, there is no statutory definition of a contract of service or of a contract for services. What the parties call their relationship, or what they consider it to be, is not conclusive. It is the reality of the relationship that matters.

In order to determine the nature of a contract, it is necessary to apply common law principles. The courts have, over the years, laid down some factors and tests that are relevant, which is included in the overview below.

As a general guide as to whether a worker is an employee or self-employed; if the answer is 'Yes' to all of the following questions, then the worker is probably an employee:

• Do they have to do the work themselves?
• Can someone tell them at any time what to do, where to carry out the work or when and how to do it?
• Can they work a set amount of hours?
• Can someone move them from task to task?
• Are they paid by the hour, week, or month?
• Can they get overtime pay or bonus payment?

If the answer is 'Yes' to all of the following questions, it will usually mean that the worker is self-employed:

• Can they hire someone to do the work or engage helpers at their own expense?
• Do they risk their own money?
• Do they provide the main items of equipment they need to do their job, not just the small tools that many employees provide for themselves?
• Do they agree to do a job for a fixed price regardless of how long the job may take?
• Can they decide what work to do, how and when to do the work and where to provide the services?
• Do they regularly work for a number of different people?
• Do they have to correct unsatisfactory work in their own time and at their own expense?

Still stuck? Well try this excellent tool from HMRC – just click here.

Follow the instructions, answer the questions honestly and openly – at the end of the analysis you will be given a summary of whether the person is employed or self employed, together with an explanation of how the tool came to this conclusion.

Information on tax for casual and part time work can be found  on the HMRC website here.

BASC cannot advise individuals how they conduct their tax affairs and the only guidance we can offer is as per the HMRC guidelines. 
 
NB if individuals wish to be treated as self employed the 'employer'  must still record individuals names, addresses, dates and amounts of payments, otherwise they could find themselves liable personally for taxes not collected at source, together with penalties.
 
ALL payments to individuals need to be recorded and a form P38A completed by the employer at the end of the year.
 
For further information please go to the HMRC web site