Since 2001 there has been a rapid growth in self-employment. It is now estimated that 4.8 million people in the UK are self-employed. This means the number of self-employed workers now accounts for around 15% of the working population.
Gov.uk ethnicity facts and figures show that Pakistani/Bangladeshi workers were most likely to be self-employed and Black workers were least likely to be at only 10.7%. Never the less, the self-employment rates have increased for all ethnic groups from 2011-2016.
The most common age of self-employment is around 45-54. Stats from 2017 show there are more self-employed men than women in the UK. This pattern has been sustained for the past 17 years.
Self-employment in overs 65s has risen by 310,000 since 2001. Young people, aged 16-24, is also a fast growing group of self-employed workers, with part time self-employment accounting for most of the rise.
The number of self-employed women has also grown. It seems a good solution for mothers to be able to work flexible hours and become their own boss; therefore many women are choosing this option for a better lifestyle.
From 2018 there are a number of tax changes that have affected self-employment. If someone who is self-employed pays themselves a dividend through their company, the allowance is dropping from £5,000 to £2,000, meaning they will earn £2,000 as dividends before paying tax. For more information click here.
Self-employment is not only changing the world of work, but is also transforming the UKs economic statistics. People are becoming self-employed and creating companies therefore workers’ pay themselves a small salary and take the rest of their income as a dividend. This reduces the overall amount of tax they pay. However it can be even more tax efficient to keep the money in the company.
Most people who are choosing to become self-employed are likely to have previously worked in big organisations and larger companies and have a wealth of experience and knowledge to pass on. Therefore the control and freedom of a freelance career might be what’s drawing the public in, why wouldn’t someone want to work on their own terms and own timescale?
When working for a company someone else determines your hours, your start time and your place of work. Self-employment means throwing this out of the window and having freedom; hence why so many more people are choosing the self-employed path. Peopleperhour.com ran a survey in which 67% of those surveyed said they freelanced for the freedom.
Cherry Picking projects that excite the individual, whilst allowing room for learning new skills and growing knowledge, is also one of the main reasons someone may choose to go down this route.
Some job positions have a salary cap, but being self-employed lifts this salary cap and your income directly relates to your productivity. So people can make as little or as much income as they like. In most self-employed cases, increasing your income potential is often a matter of finding new clients or business and increasing your output.
Self-employment can take many forms, including entrepreneurs, freelancers, gig economy workers and contractors. However this does not include zero hour’s workers, who have the same employment rights as regular employees.
To be classified as self-employed you must fall into one of these categories:
In the self-employment industry there are thousands of different career paths. Hairdressing and domestic cleaning were the most popular professions among the self-employed in 2007, However between January 2018 and March 2018 statistics show that 934,000 self-employed people work in the construction industry with a further 573,000 working in the professional, scientific and technical sector.
Service sectors account for the largest share of the self-employed labour force. Over 20% of self-employed EU workers in 2016 were working in the commerce and hospitality sector.
A rise in technology has helped self-employment to flourish. Wi-Fi, cloud sharing services and video calls, enable people to work wherever and whenever they want. It allows workers to focus on the projects they are truly passionate about and in their own time.
The rapid increase of self-employment has occurred due to the financial crisis in 2008. However there are also other factors which may be encouraging individuals to set up their own businesses.
According to a survey of the fast growing businesses in the UK, a third of workers became self-employed because it suited their skills and abilities, while 18% just had an idea they wanted to try out.
It may also be due to a need for recognition either through the sense of achievement or gaining the social standing achieved by many successful entrepreneurs. Motivation for more people to set up businesses may occur due to the ongoing success of other self-employed people.
As mentioned previously self-employment freedom is something many people strive for in their career, especially those who want to grow their business and develop their skills.
When it comes to self-employment, most people choose to commit to it full time; however, some just work on the side of another job. Full-time self-employment is composed of a much larger fraction of male workers, The ratio of male to female workers was approximately 2:1 for full time employees in 2001 and around 2:3 for part time.
Unlike part-time self-employment, full-time accounts for a larger proportion of hours. Becoming full time means having a career that you love that also brings you enough money for your needs, whilst devoting your time to skill building on the job.
Full-time means more time for clients and this can potentially be a decision maker when deciding whether to go full time.
Part-time self-employment means you can spend more time with your family and friends, and possibly hold down another job at the same time.
It’s common to find that people want to keep their regular full-time job and do self-employed work on a part-time basis, just until they are more confident in their ability to get enough clients to set up on their own.
As a whole, men were earning more than women in 2016 according to data from ONS. However as more women move into paid work, mothers in particular favour flexibility in their working hours, and therefore the amount of women becoming self-employed and earning well is increasing.
One of the highest paying self-employment jobs in 2018 is Uber driving. Uber has become a work on your own time sensation. Their requirements are pretty mild and a driver can expect to make anywhere from £13 to £25 per hour before tax.
Another high paying self-employed job is academic tutoring. English and Maths are required courses on the curriculum in virtually every school, and many students struggle with them. Therefore the demand is high and with the right skills and knowledge it’s simple to become one.
Although most believe becoming self-employed means taking a pay cut, self-employed workers earn an average of £58,450 before tax. But it isn’t all fun as 59% of freelancers said they worked at weekends.
Self-employed workers are responsible for their own business therefore they are responsible for the success and failures it may face. They are in charge of their own health and safety. They will usually have their rights and responsibilities set out in a contract with their client.
When someone becomes self-employed they no longer have access to insurance cover by an employer. So if they become ill or have an accident that prevents them from working, their income can be severely reduced. Any reduction in income my affect someone’s family or their business and therefore freelance insurance is highly important when starting up a business.
According to NerdWallet.com, approximately 20% of freelancers, across all professions are uninsured. Working without the adequate cover can lead to major financial distress and is one of the main reasons some people are avoiding becoming self-employed. A recent report by APSCo stated that 55% of contractors who are contractually required to have insurance do not have any cover in place.
If you are self-employed and would like a competitive insurance quote please call our friendly team on: 0333 321 1403 or click for a quick online quote.