working on sofa

More than 1.7 million self-employed workers will miss out of the National Living Wage when it comes into force in April, a think tank has warned.

According to the Social Market Foundation (SMF), that figure will rise to 1.9 million by 2020.

The think tank also said its research raised concerns that the National Living Wage will lead to businesses employing contractors and freelancers, rather than hiring someone internally.

Self-employed workers are not included in the new rules that will see over 25s earn a National Living Wage of at least £7.20 per hour, rising to £9 by 2020, which compares with the current National Minimum Wage of £6.70 per hour. Currently, one in seven workers are self-employed.

SMF chief economist Nida Broughton said: "Policies such as the National Living Wage make it artificially more attractive for firms to engage contractors rather than employees, and ignore a large section of low paid workers.

A spokesperson for the Department for Business, Innovation and Skills said: "This government is committed to backing enterprising self-employed people through initiatives like start up loans, tax allowances and by cutting red tape by a further £10 billion.

"Our new National Living Wage will give a boost to over one million low paid workers when it takes effect next week."

Nearly half (49%) of self employed workers are low paid - defined as earning two-thirds less than employees. In comparison, figures show that just 22% of employees are low paid.