Self-employment: Partnerships and sub-contractors

Partners are similar to sole traders, except that ownership and control of the business is shared between two or more people. People can enter into a partnership under an agreement that may be written, for example a deed of partnership, verbal or implied. A partnership can also happen by operation of law without necessarily any intent to form a partnership. A deed of partnership includes details of how any profit or loss is shared between the partners. In the absence of an agreement any profit should be shared equally among the partners.

A sub-contractor is a S/E person who enters into a contract with another contractor to do a particular job, and is commonly found in the construction industry.


A firm of builders contract to build a house extension for Tony. They sub-contract the electrical work to Lee. Lee is a S/E sub-contractor and not an employee of either the building firm or Tony.

When Lee completes the work he moves to a different contract that may be for further work with the building firm or for a different contractor.

Both of these are treated as types of self-employment.

More information can be found in ADM Chapters H4330 and H4350.

Updated 7 March 2016