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Andrew Arkley|November 11, 2025

Being Self-Employed But Working For An Employer: Explained

man working with two laptops and a monitor, self-employed but working for an employer

It’s legal to have two jobs at the same time – however, check the terms of your contract with the employer to make sure you’re not in breach.

Also, there are scenarios where you could be self-employed but work solely for one employer, if compliant with the government’s off-payroll or IR35 rules.

***Key Points: Being Self-Employed But Working For An Employer***

It’s legal to be self-employed and employed at the same time, but always check your employment contract for any restrictions.
Being self-employed means managing your own tax, hours and business, while being employed gives you PAYE income, holiday pay and other benefits.
Many people combine employment with self-employment to earn extra income, build new skills and create financial security.
Working full-time for one employer while classed as self-employed may fall under IR35 or off-payroll working rules, so compliance with HMRC guidelines is essential.
The CEST tool helps determine whether you’re technically employed or self-employed for tax purposes.
Anyone with both types of income must declare all earnings through a Self Assessment tax return to HMRC before the annual January deadline.
Balancing two roles can be rewarding but also tiring, so managing time effectively and avoiding burnout is key to maintaining performance in both.

Being Self-Employed But Working For An Employer: Update for 2026

Since we first wrote this article in early 2024, a few things have changed or evolved:

IR35 offset rules reduce double taxation risks for contractors.
HMRC updated its CEST tool and enforcement guidance.
Making Tax Digital for self‑employed income arrives from 2026.
Employees can now request flexible working from day one.

April 2024 saw the introduction of a statutory offset mechanism. This means if HMRC reclassifies a worker as employed under IR35, the company can offset the tax already paid by the contractor against its PAYE liability – avoiding double taxation.

HMRC also refreshed its CEST tool in 2024, adding clearer questions about substitution and control, to better align with recent case law.

Then in August 2024, the Department for Business and Trade published a review on employment status frameworks. It reaffirmed the existing three categories – employee, worker, self‑employed – but promised more consistent enforcement guidance by HMRC and the Employment Agency Standards Inspectorate.

From the 2025-26 tax year, Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA) is being phased in for sole traders and landlords earning over £50,000 (from April 2026, and over £30,000 from April 2027).

Self-employed but working for an employer: How it happens

Being self-employed but working for an employer can cause some confusion, so we’re here to clear things up.

There are a couple of reasons why you might be thinking, can I be self-employed and employed simultaneously?

You could be self-employed, but end up working full-time hours for one company, without receiving income via PAYE as its employees do.

Alternatively, you could be a full-time employee at a company and receive a PAYE salary, but also have a side business earning enough money for you to file a self assessment tax return.

Based on ONS employment data, from April to June 2023, 4.31 million (13%) were self-employed people and 28.46 million (87%) were employees, reports the UK Parliament.

By mid‑2025, ONS figures show around 4.4 million self‑employed workers, about 13% of the labour market.
In this guide we’ll explore the different employment opportunities presented by these two statuses. Also, we explain whether it’s legal to be both at the same time.

Employed vs self employed

First of all, what do the two terms mean? If you are employed, you tend to:

Work for someone else and receive a wage or salary
Let the employer pay your National Insurance contributions and income tax through PAYE
Receive sick pay, holiday pay and other benefits
Have an employment contract

You can also ask for paid time off in lieu after working overtime at some companies.

And in self-employment, you:

Work for yourself, are responsible for setting your own hours and managing your own business
Are responsible for paying your own NI and income tax
Do not receive holiday or sick pay
Do not have a contract of employment (supplier agreements, for example, do not count)

However, according to employment law, can you be both employed and self-employed? And can you be self-employed but working for an employer on full-time hours?

Can you be self employed and employed?

It’s legal to have two jobs at the same time. For example, you could be an employee at a restaurant in the evenings and a self-employed language tutor during the day.

So, can you be employed and self employed simultaneously? Yes, you can.

However, always check the contract with your employer first, in case it has any stipulations about taking on extra work while you are their employee.

Later in this guide, we’ll explain how to pay your fair share of income tax when you are employed and self-employed at the same time.

Benefits of being both employed and self-employed

Why would you do this though – and is it right for you? Advantages include:

Making extra money
Having a plan B in case your employer makes redundancies
Taking what you learn in your employed job and using it in your self-employed work (and vice versa) to progress faster
Monetising your hobbies and interests
Starting your own business without worrying about making a profit from the outset
Learning how extra skills such as how business expenses and tax work, which would look great on an accounting CV if you change careers, for example

The main downside is the risk of burnout. It can be very tiring to have two jobs at once and the risk is that your performance will suffer in one, or both, lines of work if you’re fatigued.

Working for someone on a self-employed basis

Alternatively, there are several reasons why you might work for one employer all the time, but you’re self-employed.

For example, let’s say that this is your employment status – as a freelancer you have a close working relationship with a single client. Either:

You’re involved with a large project requiring months or years to finish
The company makes heavy use of your services, so you don’t have the time nor the need to find any other clients

However, be careful. HMRC is wary of companies using self-employed contractors as if they were full-time employees, to avoid paying pensions or National Insurance. For employment law purposes they are disguised employees according to HMRC.

The government has guidance on off-payroll working or IR35 rules, to ensure this doesn’t happen. There is a ‘check employment status for tax (CEST) tool’ to determine if you are technically employed or self-employed for the work, or whether IR35 rules apply.

For example, if the employer can define your working hours, HMRC may view you as employed rather than working for yourself. Here is a flowchart explaining the different rules for contractors.

Being self-employed: How to pay tax to HMRC

Whether you are a freelancer with one client, or a full-time employee with an extra side hustle, you’ll likely need to complete a self assessment tax return.

Remember, the deadline to pay any outstanding tax you owe is the end of January (for the previous tax year). Otherwise there’s a penalty fee!

Below a certain income threshold, there is a tax-free personal allowance. At the time of writing, it’s £12,570. After that, you pay 20% on taxable income up to £50,270 and 40% between that and £125,140 – beyond, it’s 45%.

Crucially, if you are both employed and self-employed, both forms of income should feature on your self assessment tax return. However, you won’t pay the same tax twice.

FAQs: Being Self-Employed But Working For An Employer

What does it mean to work for an employer?

Working for an employer means you are hired under a contract of employment to perform specific duties in return for a wage or salary. Your employer controls key aspects such as working hours and responsibilities, and also handles tax and National Insurance contributions through PAYE.

What is the 2-year rule for employees?

The two-year rule refers to the length of continuous employment needed before gaining certain statutory rights in the UK. After two years with the same employer, employees are entitled to claim unfair dismissal, receive statutory redundancy pay, and benefit from extended notice periods.

What are the advantages of working from home for employers?

For employers, allowing staff to work from home can reduce overhead costs, boost productivity and increase employee satisfaction. It often leads to fewer absences, access to a wider talent pool and improved staff retention thanks to better work-life balance.

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So, can I be employed and self employed at the same time?

In short, yes, you can be self-employed but working for an employer too.

We hope you enjoyed this blog. For more insights and guidance around interview advice, take a look at the following articles.

If you have any questions about the world of work, there’s a good chance the answer is on our blog. Recently we have written a conflict resolution model guide on how to use one at work, plus what managing upwards means, for example.

And if you want to be employed at a new company but need help writing a new CV, look no further.

That’s what the PurpleCV team are experts at, so please contact us for support or if you have any queries.