The current state of self-employment in the UK

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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 volatility 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 across various industries. The social security arm of the public admin and defence sector is leading the list with a remarkable 21% increase 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.

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 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.

A better understanding of IR35 by companies could also be having crucial impact on the growth of self-employment, amongst many industries in recent years. For example, professional, scientific & technical activities saw a 9% rise year on year. This suggests companies may be becoming more comfortable with engaging limited company contractors on outside IR35 contracts.

When the IR35 public sector reforms in 2017 were expanded to the private sector in 2021, many companies took a cautious approach and reduced the amount of limited contractors they engaged with. This was primarily due to the fear of misunderstanding the legislation and possibility of being liable for tax and national insurance should the contractor be deemed ?inside' IR35. However, the growth in the professional, scientific & technical sector suggests that companies may have increased their knowledge of IR35, through either hiring specialist resource or seeking external advice. This, along with the introduction of the new IR35 Offset legislation in April 2024, is likely to have brought more comfort to companies when it comes to engaging with limited company contractors.

A woman in a reflective orange safety jacket and white hard hat smiling outdoors at a construction site.

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 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 last few years, recruiting non-cognate graduates to diversify their talent pool. This led to over 40% of their newly qualified technical staff in the UK being women.

Plus, the construction industry is projected to see an average annual increase of 3% between 2022 and 2025 2 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.

A baker in a white shirt and orange gloves handling a tray of freshly baked bread in a bakery

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.

ChallengeAll (%)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%

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.