Number of self-employed falls one fifth since Covid-19

IR35 taxation changes, Brexit and Covid-19 blamed for choking off rise in self-employment

The number of solo self-employed people has fallen for the second consecutive year, as the pandemic and increased taxation have deterred self-employment.

Almost a million freelancers have given up on being their own bosses, with the number of self-employed workers falling to around 4.1m from a peak of 5m before the pandemic, new figures from trade body Ipse showed.

The number of solo self-employed workers in the UK fell by 5 per cent from 4.3m in 2020 to 4.1m in 2021.

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This marks the second consecutive year that the number of solo workers has dropped since the 40 per cent growth in self-employment between 2008 and 2019.

The decline began in 2020, when 700,000 freelancers gave up self-employment after the pandemic hit their incomes and caused average earnings to fall by close to a third.

Some of the sectors where numbers dropped the most were in “artistic, literary and media occupations”, with numbers falling 14 per cent to 258,000, the figures showed. In construction and building trades numbers dropped 10 per cent to 366,000.

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However, the number of “transport drivers” and those working in “agricultural and related trades” rose 6 per cent, as workers were called in to drive lorries and get food on shelves after supply chain issues struck towards the end of last year.

Derek Cribb, CEO of Ipse, said: “It is worrying to see that the number of self-employed workers has fallen for a second year running, especially given the significant contribution the self-employed are known to make in periods of economic recovery.

“It is clear that the pandemic and other issues like IR35 and Brexit have seriously impacted the sector and have sown seeds of doubt and uncertainty throughout the freelancing industry over the past two years.”

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Tim Adler

Tim Adler is group editor of Small Business, Growth Business and Information Age. He is a former commissioning editor at the Daily Telegraph, who has written for the Financial Times, The Times and the...

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