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Independent contractors are self-employed workers who provide services for an organisation under a contract for services. Independent contractors are not employees and are typically highly skilled, providing their clients with specialist skills or additional capacity on an as needed basis.
Becoming an independent contractor is one of the many ways to be classified as self-employed. By definition, an independent contractor provides work or services on a contractual basis, whereas, self-employment is simply the act of earning money without operating within an employee-employer relationship.
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed.
A 'self-employed contractor' is a person who is genuinely in business for themselves (ie s/he takes responsibility for the success or failure of the business) and is neither an employee nor a worker.
There is a common misconception that people who work in the construction industry are always self-employed. This is not the case. People who work in the construction industry should work out their employment status in the same way as everyone else.
If you are an independent contractor, then you are self-employed. The earnings of a person who is working as an independent contractor are subject to self-employment tax. To find out what your tax obligations are, visit the Self-Employed Individuals Tax Center.
Contractors can also be self-employed, but they perform tasks on a contractual basis, rather than selling any products or rolling, bookable services. For example, a plumber would work for a client according to an agreed, one-off contract.
A contractor provides services to a specific client under specific terms. A contractor, however, can either be classed as: A worker or an employee (if they work for a client through an Umbrella Company or Agency then the Umbrella Company/Agency is their Employer; not the Client) or as.
Freelancers, sole traders, limited company directors and contractors are considered self-employed individuals. They run their own businesses, and are responsible for its success or failure. These individuals aren't paid through PAYE, and don't enjoy employment rights that employees are entitled to.