Guide
HGV Employment Status: Agency, Umbrella, PSC and Owner-Driver
Employment status is not a choice. It is a conclusion drawn from what actually happens: who controls the work, who carries the financial risk, whether the person has to do the work themselves, and what they bring to it.
In haulage there is one fact that dominates the analysis, and it is whether the driver supplies the vehicle. A driver who turns up and drives somebody else's truck is in a very different position from one who arrives in their own.
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Written by the HGV Accountants editorial team
- Who this is for
- HGV drivers being offered self-employed or limited company arrangements, and the hauliers and agencies engaging them.
- The problem
- Status in road haulage is often decided by what an agency's paperwork says rather than by what happens on the job, and the cost of the difference lands on whoever HMRC decides is responsible.
What the Tests Look At
- Control
- Who decides what work is done, when, where and how. A driver given a run, a time and a route by a transport office is under a high degree of control.
- Personal service and substitution
- Whether the driver must do the work personally. A genuine, usable right to send another suitably qualified driver points away from employment. A right that has never been exercised and would be refused in practice carries little weight.
- Financial risk
- Whether the person can make a loss. Supplying a vehicle, funding fuel, correcting a problem at their own cost and carrying insurance are all real risk. Being paid by the hour with no vehicle is not.
- Equipment
- Who supplies the truck. In haulage this is close to decisive, because the vehicle is the business.
- Mutuality and integration
- Whether work is offered and accepted as an ongoing obligation, and how far the driver is part of the operation rather than working for their own account.
HMRC publishes a status tool, CEST (opens in a new tab), and will stand behind its outcome where the information entered is accurate and reflects the reality. Keep the printed outcome and the answers given, because the answers are what the outcome depends on.
The Four Arrangements in Road Haulage
| Arrangement | Who operates PAYE | Where the status risk sits |
|---|---|---|
| Direct employment by a haulier | The haulier | Minimal. The status is what it looks like |
| Agency supply | Usually the agency, under the agency rules | With the agency, and in some circumstances further up the chain |
| Umbrella employment | The umbrella, which employs the driver | With the umbrella, though unusual deductions and schemes create separate exposure for the driver |
| Driver's own limited company | Depends on the off-payroll rules and the size and status of the engager | With the engager where the off-payroll rules apply, and with the company where they do not |
Why the Owner-Driver Position Is Different
Once a driver owns or finances the vehicle, the analysis changes across almost every test at once. There is substantial capital at risk, a real prospect of profit and loss, equipment supplied, and usually more than one customer. That is what a business looks like.
It does not make the question disappear. An owner-driver working exclusively for one haulier, on that haulier's livery, to that haulier's instructions, is closer to the line than one running for several customers. But the presence of the vehicle moves the analysis a long way, which is why the HGV owner-driver service is a genuinely different engagement from driver work.
If You Are Being Offered a Company
Questions to ask before agreeing
- Whose vehicle will I drive, and on whose operator licence?
- Can I genuinely send another qualified driver in my place, and would that be accepted?
- Am I paid for the job or by the hour, and who fixes the rate?
- Who carries the cost if something goes wrong on a run?
- Has the engager assessed the off-payroll position, and will they give me the determination in writing?
- What does the arrangement cost me to run each year in accountancy, filing and time?
- What happens to my income if the engagement ends next month?
If the honest answers are that you drive their truck, to their schedule, for an hourly rate, with no substitution and no risk, a limited company adds cost and filing without changing the underlying position.
Common Questions
Can an agency make me self-employed?
An agency can offer an arrangement and describe it however it likes. It cannot change what the engagement actually is. Where the agency rules apply, the agency is generally required to operate PAYE, and describing the driver as self-employed does not remove that.
Is IR35 the same thing as employment status?
They are related but not identical. Employment status is the underlying question of whether a person is employed or self-employed. The off-payroll rules, commonly called IR35, apply where somebody works through their own company and ask whether the engagement would be employment if the company were not there. If it would, the payment is taxed as employment income.
Who decides whether the off-payroll rules apply?
For engagements with medium and large organisations in the private sector, and with public authorities, the client organisation makes the determination and passes it down the chain. For small clients, the responsibility stays with the driver's company. The size of the engager matters, so it is worth establishing early.
My mate has driven self-employed for years and nothing has happened.
Nothing happening is not the same as being correct. Status is usually tested when something else brings the arrangement to attention, such as an enquiry into the engager, an accident claim, or a dispute over pay. At that point the question is asked about all the years at once.
Related Guides
- CIS and HaulageDelivering materials is generally outside CIS. Working on the site is where it changes.
- HGV Payroll and AllowancesPAYE, employer costs, night-out payments and the conditions attached to paying them free of tax.
- Overnight SubsistenceThe night-out rate, the sleeper cab reduction, and the conditions that make it free of tax.
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