New research from the Association of Independent Professionals and the Self-Employed (IPSE) has revealed that average freelance earnings in Q4 2021 hit their highest level since before the UK’s referendum on EU membership in 2016.
IPSE figures show that average Q4 2021 earnings were £29,547, compared to £25,551 in the third quarter of the year. The fourth quarter figure also showed a doubling of incomes since the onset of the COVID-19 pandemic in Q2 2020, with rising rates being driven by self-employed work returning to pre-pandemic levels.
In the fourth quarter, the average number of weeks that self-employed workers went without work was the lowest since Q4 2019. IPSE figures also showed that average day rates rose from £535 in the third quarter to £584 in the fourth.
Despite these improvements, the IPSE’s Freelancer Confidence Index fell from -13.2 in Q3 2021 to -19.1 in the fourth quarter, largely as a result of the continuing impact of IR35 rules introduced in April 2021. Furthermore, 81 per cent of freelancers voiced concerns about the rising cost of living and forecast that business costs would rise over the coming year.
The report also showed that 38 per cent of self-employed workers are in debt. 16 per cent of those workers are accruing debt using credit cards issued for their self-employed businesses. Indicating that an increasing number of freelancers are falling into debt, the number reporting that they don’t have any business debts fell from 67 per cent in Q3 2021 to 59 per cent in Q4.
IPSE CEO Derek Cribb said: “Today’s report shows that the self-employed sector is finally recovering after two years of COVID-19 uncertainty. Work opportunities, day rates and quarterly incomes are soaring towards pre-pandemic levels and freelancers are now able to make a living from self-employment again.”
“However, despite this, freelancer confidence has continued to slump as IR35 acts as a sword of Damocles on the industry. The government, therefore, needs to step in and solve the confusion around IR35 if the sector is going to reclaim its position as one of the most dynamic and innovative parts of the UK economy.”
“Self-employment can be a driving force for economic growth but if it is to realise its full potential, the sector must be supported by government policies that seek to encourage, not hinder, it’s natural vibrancy.”
