March 20, 2023
Being self-employed is an option that many people choose, though for some, it’s less a matter of choice and more about how their particular industry works. According to Statista, in November 2022 around 4.2 million people in the UK were self-employed. The number of self-employed workers in the UK had been rising steadily, to a peak of over 5 million at the start of 2020, though since the Covid-19 pandemic, this number has fallen again.
Source Self-employment in the UK 2022 | Statista
As many people will have found, perhaps as a result of the pandemic, whilst self-employment certainly has its advantages in terms of the freedom to ‘be your own boss’, and to work the hours that suit you, it can also have its drawbacks. Without an employer to cover your income if you are sick or injured (most self-employed workers can’t even claim statutory sick pay), or provide health insurance, self-employed people are at risk of financial hardship if they haven’t made sufficient provision for the unexpected.
According to a Freedom of Information request by The Community Union, during the pandemic, over a fifth (21%) of all applications to the Test and Trace Support Payment scheme were from self-employed people. Understandably, without an income, it can be difficult to cover even basic expenses, let alone save for the future.
New research suggests that over half (57%) of self-employed workers in the UK rely on personal savings when they are not working, and a huge 81% aren’t seeking financial advice.[1] The research also reveals that around two-thirds (64%) of people who are self-employed in the UK don’t have a regular income, with just one in five (23%) receiving a monthly pay packet and nearly half (48%) having a fluctuating income.
With the rising cost of living, and private rents in the UK increasing at the fastest rate in five years, a quarter (24%) of those surveyed also said they only had enough money to cover their needs for three months if they were unable to work. With this in mind, it perhaps isn’t surprising that 31% of self-employed people surveyed said they didn’t think they could afford to seek professional advice on their finances. But if you’re self-employed, it’s essential to be prepared for anything by having the right financial protection in place.
One option you could look into is income protection, which could provide a financial safety net if you’re unable to work because of illness or injury. Critical illness cover and life insurance could also help you to ensure your family’s finances are covered in the event of the unexpected.
[1] The research was carried out online by Opinium Research across a total of 2,002 UK adults (Booster sample of 502 self-employed workers and 1,015 Renters). Fieldwork was carried out between 21-27 October 2021.
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