In recent years, self-employment levels in the UK have exhibited a degree of volatility, reflecting the impact of economic and societal changes - especially as we emerge from the pandemic. Data from the Office for National Statistics (ONS) provides insights into this ever-evolving landscape and shows that although there was a 2% increase in the number of self-employed workers in 2023 compared to 2022, the numbers have somewhat dropped since. This instability can be attributed to factors like economic conditions, where some people turn to self-employment to generate their own income independently, while others would rather achieve financial stability through a monthly pay cheque. Economic recovery efforts or improvements in business confidence may also encourage entrepreneurship and self-improvement.
Changing work preferences is a significant factor that can contribute to these fluctuating figures, as many individuals value the flexibility and work-life balance of self-employment, while others may struggle with going alone and choose to become a regular full-time employee elsewhere. Meanwhile technology plays a part too, as with the help of digital platforms and tools, those who wish to become self-employed can start and operate their own businesses with lower barriers to entry, facilitating the opportunity for growth of the self-employed workforce.
There have been noticeable increases in self-employment in various industries. The social security arm of the public admin and defence sector is leading the list with a remarkable 32% increase in in self-employment from 2022 to 2023. This significant uptick could be attributed to various factors such as changes in government contracting practices, outsourcing services, and the increasing demand for specialised expertise in areas related to public policy, security, and administration.
Additionally, there has been an 11% increase in the wholesale, retail and repair of motor vehicles sector. The ever-evolving landscape is largely thanks to the technological advancements in this sector. As traditional retail models give way to e-commerce and online platforms, there are more avenues for people to establish businesses to meet the varied needs of the public. Plus, with the rise of electric vehicles and other automotive technology, there are more and more niches for suitably qualified self-employed electric vehicle repair and maintenance mechanics, provided that the car is serviced according to the service schedule and instructions provided by the manufacturer.
In joint third place are the real estate and administrative support services industries, with a 10% rise in both. The real estate market is influenced by several factors, including economic conditions, as well as changes in consumer preference. During these fluctuations, people take the leap into self-employment to make the most of the opportunities provided as the market shifts. On the other hand, administrative support services may have seen an increase in self-employment as a result of the rise of remote work and the demand for flexible administrative work to keep up with demand. This has allowed people the opportunity to cater to a wide range of clients and industries while benefiting businesses that require flexible staffing.
The changes to IR35 are a factor, which could be positively impacting the growth of self-employment in many industries in the UK. Professional, scientific & technical activities have seen a 9% rise YOY, and the IR35 changes may have contributed to this.
When IR35 was initially introduced, many companies took an extremely cautious approach, and many stopped engaging with contractors altogether. This was due to the fear of double taxation but, in recent years, they've started to understand the boundaries. This, along with the introduction of the new IR35 Offset legislation in April 2024, means companies are once again a lot more comfortable when it comes to engaging with contractors.
The changing of understanding around IR35 determination and the IR35 offset introduction has seen people who were perhaps self-employed before IR35 (and then changed to being an FTE due to the lack of available contracts) resuming self-employment, as the opportunities are better now, and the assumed risk is less - helping to grow self-employment figures in the UK.
Shifts in self-employment between the sexes
We delved into data around dynamics between men and women across the year and the results are certainly interesting. One striking trend is the substantial increase in female participation in the construction industry, with a 21% rise in self-employed women within this sector from 2022 to 2023. However, there has been no growth in the number of self-employed males in the same industry over the same period. This significant growth in female representation in construction could be attributed to various factors, including initiatives to promote diversity and increasing opportunities for women in traditionally male-dominated industries. Construction firm Currie & Brown undertook one such initiative during the past few years, recruiting non-cognate graduates to diversify their talent pool. This led to over 40% of their newly qualified technical employees in the UK being women.
Plus, the construction industry is projected to see an average annual increase of 3% between 2022 and 2025 and there is a demand for skilled workers.
Overall, the data indicates a positive trend in self-employment for women, with a 3% increase in the total number of self-employed women, year on year, compared to just 2% for men. This suggests that women are embracing entrepreneurship and seizing opportunities across various industries. However, it's important to continue addressing the barriers that women face in accessing and succeeding in self-employment, including access to funding, networks and support systems.
ONS self-employed data
The driving force behind going self-employed
The motivations behind making the leap to pursue self-employed work can be deeply personal. Work/life balance, family commitments and life goals are great driving forces to make the most of the benefits that come with freelancing.
The majority of both men and women state that the desire to "be their own boss" is their main motivation. The draw of picking your own hours, projects and clients appeals to 66% of men and 62% of women. However, while both men and women value autonomy, flexibility is a lot more important to women - there's a significant (22%) difference, as 63% of women value flexibility compared to just 41% of men.
On the other hand, men are slightly more inclined to make the jump in the pursuit of higher earning potential, with 27% stating it's the most important factor, in comparison to just 21% of women.
| Reason for Pursuing Self-Employment | All (%) | Male (%) | Female (%) |
|---|---|---|---|
| Being my own boss | 66% | 62% | 69% |
| Flexibility | 55% | 41% | 63% |
| Escaping traditional employment systems | 34% | 32% | 35% |
| Pursuing passion | 34% | 30% | 37% |
| Higher earning potential | 23% | 27% | 21% |
| Success of side hustle | 18% | 18% | 18% |
| Lack of traditional job opportunities | 12% | 11% | 12% |
| As a result of unemployment or inactivity | 11% | 13% | 11% |
| Redundancy | 8% | 11% | 6% |
| Apprenticeship ended | 2% | 5% | 1% |
This article is for information purposes only and should not be solely relied upon when making important personal or business decisions and that the reader should always consult an appropriately qualified professional.
Self-employment in the UK is characterised by both challenges and opportunities and is a dynamic environment for freelancers to navigate. While financial instability, limited access to benefits and rising living costs remain significant hurdles for many, there are plenty of growth opportunities and many Brits have been seizing them.
As a freelancer or self-employed person, working to navigate these challenges, and importantly leverage growth opportunities, it is essential to prioritise risk management and protection in the long run.
But what is public liability insurance?
Public liability insurance and professional indemnity insurance can be crucial safeguards, offering financial protection against unforeseen liabilities and legal claims. Public liability insurance covers businesses against allegations of personal injury and property damage claims made by members of the public. Professional indemnity insurance protects against claims of negligence or errors in professional services.
By investing in comprehensive insurance coverage and adopting strategic initiatives to tackle the challenges identified in this report, freelancers can safeguard their businesses and capitalise on emerging opportunities.
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Methodology
We constructed the freelance index investigating the best spots to be a freelancer in the UK. This was achieved by ranking 49 UK cities against five factors to determine which location would be best for a freelancer. The factors and how the data was collected can be found below:
Freelance jobs per 10k: Searched for "freelance" in job search on Indeed for each specific location. Then calculated the number of freelance jobs for every 10,000 people in a given population. Source: Indeed
Percentage of freelance jobs paying more than £40,000: Searched for "freelance" in job search on Calculated the percentage of freelance jobs paying more than £40k out of all freelance jobs in each location. Source: Indeed
Full Fibre coverage ranking: Took the full fibre speed for each location. Source: https://labs.thinkbroadband.com/local/councils
Train Connectivity Ranked the cities by how many train stations they had. Source: https://dataportal.orr.gov.uk/media/1924/ad-hoc-station-car-parking.csv
Free Wi-Fi Workspaces: The survey was conducted using Censuswide and included 500 self-employed workers, freelancers, or sole traders in the UK in January.
According to the ONS, high-pay employees are those earning anything above 1.5 times £15.88, which is £23.82, at 35 hours per week that is £41,532.40 per year, which was rounded down to £40,000 for the study to suit the salary filters on Indeed. Source:
Data for the analysis of self-employment in the UK by sector and sex was from the ONS, comparing the 2022 and 2023 releases of EMP14: Employees and self-employed by industry found here.
ONS data in this study has been adapted from data from the Office for National Statistics licensed under the Open Government Licence v.1.0.
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