CEST Tool

The CEST status tool is HMRC’s digital tool that allows you to Check your Employment Status for Tax. It essentially helps you figure out whether your work practices fall inside or outside the scope of the new IR35 regulations. You can access the CEST tool via HMRC.

How does the CEST status tool work?

CEST is anonymous, so you don’t need to worry about HMRC storing your information. You can use it whether you’re an agency, an individual contractor or someone in charge of hiring. To use it, you can just head to HMRC and go through the multiple choice questions.

Be aware that the tool has been criticised for not being as useful or thorough as anticipated, only taking into account certain elements of your employment situation.

What is IR35?

IR35 is a set of laws that was introduced to reduce the risk of disguised employees. By this, we mean people who are employed as contractors, but they are employees in everything but name. They take paid holiday from work, they work for a single organisation permanently, and they’re irreplaceable. But they’re benefiting from being paid at a freelancer rate, and the company is evading paying Class 1 National Insurance on them.

What kinds of questions will I answer?

The CEST tool generates a selection of multiple choice questions. Here are a few as an example:

  • Do you provide services via a limited company or as a sole trader?
  • Would your client accept a substitute?
  • Does your client have control over your work (for example they can move you to a different location, decide how the work is done, etc.)?
  • What happens if the client is unhappy with your work?
  • How are you paid?
  • Do you receive any “employee” benefits, like company car, laptop, etc.?
  • Once you’ve answered them, you’ll get HMRC’s view on whether your work should be considered PAYE employment, and if your client should treat you as an employee (and pay Class 1 National Insurance rates, etc.).

 

Frequently Asked Questions

  • How can I access the CEST tool?

    The best way to access the CEST tool is via the HMRC website. Here, you can get a complete check of your status to ensure you are paying the correct tax.

  • Can HMRC keep my information on record?

    The CEST tool is completed anonymously, so you don’t need to worry about your information being stored, or affecting your future tax declarations. For more information, visit the HMRC website.

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