50% of working people could be self-employed by 2020

posted by 4 years ago in News

With self-employment steadily rising over the past few years, the UK was labelled as the self-employment capital of Western Europe in 2014. With 4.6 million people, they account for 15% of those in work.

The founder, Xenios Thrasyvoulou of PeoplePerHour.com, the online marketplace for freelance work and services said, “the self-employed workforce is growing by the day, and on-demand services are being required more and more.”

But is that all about to change?

Wednesday’s Budget announcement was met with mixed views.

  • Corporation Tax is to drop to 19pc in 2017 then 18pc in 2020
  • National Living Wage is to rise to £7.20 in Apr 2016 then £9.00 in 2020
  • NI employment allowance is to increase from £2,000 to £3,000
  • Dividend Tax Credit to be replaced a Dividend Allowance of £5,000
  • Employment Allowance for those self-employed will be cut, and no new incentives will replace it.

And that’s just to name a few points. Craig Simpson, national head of corporate tax at accountants Baker Tilly, said Osborne had attacked the ‘profit extraction strategy’ of small and medium-sized business owners, a remarkable move for a Conservative chancellor, by moving towards equalising the benefit of taking dividends rather than salary.

‘On the one hand the reduction in corporate rates to 19% from 2017 and 18% in 2020 will likely be offset by increases in dividend tax rates leaving the director shareholder worse off in most cases,’ he said.

‘It is hard for that not to be seen as an attack on entrepreneurialism and enterprise for small and medium-sized businesses who likely view the tax breaks from paying dividends as a way of correcting and imbalance for taking risk in setting up their own business and employing people,’ added Simpson.

The increase of freelancers has grown by 12% since 2011. Stats from current trends also show that over 50% of working people will be doing some sort of freelance work, including their day jobs.

Although the increase is impressive, a question must be asked, would freelancers rather work for employers? Do they have a choice?

A Populus survey taken in 2014 showed that 84% of self-employed people admitted they were much happier as a self-employed worker, this in comparison to being an employee, even though many earned less. A benefit which is most appealing to freelancers is their freedom, and the fact they can make their own choices, for example, they choose their work setting, their work times and the time they decide to take off. They can balance their home life around their work life.

IPSE, (The Association of Independent Professionals and the Self-Employed), has over 21,000 members, which makes it the largest association of Independent professionals in the EU. They represent freelancers, contractors and consultants from every district of the economy. If half of working people within 5 years are going to be self-employed then policymakers have to cater to their needs.