By Daniel Hunter
The average self-employed worker earns more than double the national average salary, according to a new report by Boox, the cloud based accountancy service.
Self-employment tax incentives and a recent surge in freelance demand have resulted in a positive increase in freelance pay that dwarfs the national standard annual income.
The findings emerged in a study of 1,000 British self-employed workers which found 70% of the self-driven workforce earn over the UK’s £26,093 average with the average self-employed salary hitting an astonishing £50,820 per year.
The average salary differences are particularly surprising given 25% of self-employed workers became contractors as a result of being made redundant.
“This report really lays bare the remarkable changes happening in the self-employed sector. Self-employed workers now account for 12.4% of the UK workforce, a 20-year high,” said Phillip Venn, Commercial Director at Boox, who conducted the report.
“The economic climate has forced a lot of people out of work and many have used the opportunity to set up business for themselves. Ironically, this employment shift has become one of the positive drivers in the stuttering economy.”
For a group of workers who earn well above the national wage, it may come as little surprise that 59% of freelancers often work on the weekend with 15% working at least 35 weekends a year. Additionally, 40% of self-employed workers work longer than the average 41 hours per week with 15% putting in more than 51 hours of work.
One of the drivers of self-employment, according to Dr. John Glen, senior lecturer in Economics at Cranfield School of Management, is what he calls projectisation.
“The increased projectisation of work and an increasing preference for employees to hire contract workers has all led to today’s self-employed workforce becoming an economic powerhouse," he said.
"The Boox report comes at an opportune time as it is a significant body of evidence which clearly illustrates the realities of being self-employed in the UK.”
“As the report reveals, becoming self-employed can enable workers to earn more money than they might in permanent employment. Employers value the skills and expertise this diverse group of workers bring to an organisation. The rise in the number of self-employed workers is also beneficial for government because it is a key driver of wealth creation, employment and diversity.”
A freelancer on holiday: The report confirms the long held suspicion that the urge to work on holiday is too overwhelming for many. 24% of self-employed workers take no annual leave at all and when they do make the trip, 45% work whilst on holiday. In fact, the self-employed are twice as likely to check work emails whilst on holiday.
Reasons for the growing freelance population: There are three very clear motivators for going freelance; 30% want to be their own boss, 25% are prompted by a major event such as redundancy, and 19% go in search for a better work-life balance. Struggling to find work is the motivator for just 4% of people going freelance.
The gender and age divide: Just over two in three freelancers are male, 69%, compared to 31% of females. However, the report suggests that women are driving the next generation of freelancer with one in ten women freelancing between 24 to 34 years of age compared to only 4% of men.
Education and skills: As one might expect from a thriving sector of the economy, freelancers are well educated with both men and women revealing similar levels of qualification. Overall 31% have a professional qualification, only 4% have no qualifications, nearly one in four, 23%, are educated to undergraduate level, whereas 12% have a masters and 8% another form of postgraduate degree.
Retirement: Freelancers may earn more than the average UK employee but that does not mean they intend to enjoy the fruits of their labour through early retirement. In fact, one in four, 26%, intend to retire after 70 year of age or never at all. 18% intend to retire before the age of 60 and a lucky 1% before the age of 45.
Self-employment and the taxman: No matter how organised they are, as a national average, more than one in four freelancers, 26%, have paid too much tax, and just over one in ten, 11%, have paid too little. Combined it means nearly four in every ten freelancers have got their tax calculations wrong.
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