A new survey has revealed the significant impact Covid has had on the self-employed, with as many as one million being pushed into debt since the start of the pandemic.
The report, compiled by the Association of Independent Professionals and the Self-Employed (IPSE) and digital bank Starling, shows that because of the pandemic:
- 23% of self-employed workers have had to take on credit card debt to get by (this equates to approximately 1.05 million people).
- 14% have taken advantage of their overdrafts.
- 27% have had to go into their savings.
- 18% will need to borrow money to pay their tax bills.
- 47% have been putting money aside throughout the year to prepare for their tax return.
The research shows that the self-employed have faced a number of issues during the pandemic. For example, many have not been able to access the Self-Employment Income Support Scheme and there’s the fact that there has been an increase in late payments, with 28% saying they have been paid late by a client during the pandemic.
Chloé Jepps, Head of Research at IPSE, commented, “This research shows in detail the drastic and deeply concerning impact the coronavirus pandemic has had on freelancers’ finances. In particular, it shows how its effects are likely to last for years to come, as many freelancers have burned through their savings and turned to credit cards and borrowing to get by.
“The pandemic led work to dry up across the sector, and too few freelancers have accessed government support – often because they are excluded from it. The situation has been worsened by the increase in late payment – particularly for female freelancers. Before the pandemic, female freelancers were often in a less secure financial position than their male counterparts (in large part because of the gender pay gap). Now, poor payment practices are making the situation even worse, disproportionately affecting their finances and even mental health.
“The government has rolled out some support for the self-employed, but it must urgently look at ways to make this more flexible and fair – to ensure it reaches all self-employed in need. It should also look at new and longer-term ways to address the freelancer financial crisis: particularly the damage done by late payment and the disproportionate taxes still hanging over many struggling self-employed.”
Anne Boden, CEO and Founder of Starling Bank, added, “Self-employed people are the backbone of the British economy. These findings indicate how hard hit they have been by the pandemic, creating a real need for banks such as ours to continue to support them by offering competitive rates, competitive loans and money-saving services. Without these, they simply won’t survive.”
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