The rise in self-employment: could it be for you too?
Working for yourself has always appealed to many people but it seems that more people than ever are now opting to be their own boss, according to recent research. Since 2001, the number of people working for themselves has been on the rise and 15% of the workforce are now officially classed as self-employed. Self-employment can take many forms - including freelancers, contractors, entrepreneurs and ‘gig economy’ workers.
A recent report from the Office for National Statistics (ONS) has reported many changes in the way people are working. A notable statistic is that of the over 65 bracket having the largest rise in self-employment over the 2001-2016 period, with the number of people self-employed in this age bracket almost tripling. Young people (aged 16-24) also saw a huge rise of around 74% in this time period.
These statistics coincide with the UK labour market in general being particularly strong over the last few years. Unemployment is at a low and the rise in self-employment from 12% of the workforce (2001) to 15% of the workforce (2016) is thought to be supporting these rates significantly.
Other institutions such as the CIPD have reported similar stats. Their latest report also delves into some of the reasons behind these changes; concluding that they are likely to be due to the UK’s regulatory climate. In recent years, regulation has been designed to encourage entrepreneurialism, thus there has been more incentives and opportunities for self-employment than there was a decade or so ago. They note that taxation differences have also played a small part in people choosing self-employment over working for an employer.
There are many notable advantages to being self-employed and they are often considered to be aspects such as:
- The freedom to have more of a work/life balance
- Answering only to yourself and your clients
- Getting to work on a multitude of different projects, in different locations, meeting new people etc. There is a lot of change which particularly suits some personalities.
- The excitement of taking responsibility for your company’s success.
Whilst working for yourself can in theory bring less job security, many contract positions in fact have the potential to be extended multiple times, thus allowing people to reap the rewards of being self-employed with the security of a staff/permanent role.
The Resolution Foundation (and other think tanks) have questioned whether the overall rise comes from a desire for flexible working, or whether some people had no other choice. Recently, there has been a wider debate about self-employment, particularly in relation to the ‘gig economy’, and whether the tests for determining employment status should be reformed. The ‘gig economy’ refers to a labour market characterised by the prevalence of short-term contracts or freelance work, as opposed to permanent jobs. Companies such as Uber and Deliveroo have come under scrutiny for not providing simple workers’ rights such as holiday or sick pay because the employees technically work for themselves. Last year, the Taylor Review into working practices recommended that the government classify gig economy workers like Uber drivers as dependent contractors, rather than self-employed workers, to help improve their rights. The government has since promised to overhaul employment rights and is consulting on proposals around holiday and sick pay rights.
If you are interested in becoming self-employed, Olivia Graham, Quanta’s Senior Contract Administrator, gives us an insight below into the options available around setting up a limited company…
‘’Utilising a Limited Company in the UK is very commonplace. In addition to protecting the individual through using the Limited Liability set up, there are benefits to be gained from a tax and social security payment perspective.
The set up process is straightforward though the majority of people would use an Accountant to assist them not just in the formation process, but also for the subsequent tax and accounting advice.
If you choose to set up a Limited Company yourself these are the typical steps you would take:-
- Choose a Limited Company name
- Go online at Companies House (https://www.onlinefilings.co.uk/company/creation/ltd/product) and set the Company up for a small fee (there is an excellent guide to follow on the set up)
- Appoint a Director (yourself and/or any others that you may want to choose)
- Set up a Bank Account in the name of the Company
- Register for VAT if required online at the HMRC website (you must register for VAT if your turnover will exceed £85,000).’’
If you require any more information, you can find it on our Contractor Zone on our website or on the government website. At Quanta, we have a huge array of contract and permanent roles available, to suit all needs within Life Sciences, Renewable Energy & IT. Click here to view our latest roles.