Are the self-employed more vulnerable to debt?

Written by Tom Sheridan on 11 March 2016

As the number of self-employed people rises, we’ve taken a look at what that means for how they deal with debt.

The number of self-employed people in the UK is rising. In fact, rocketing might be a better term. Data from the Office for National Statistics shows that there was a rise of 98,000 self-employed people in the three months to November last year, compared to the same period in 2014.

According to the Guardian, there are now 4.6 million self-employed people in the UK – a record figure.

For some, that’s great news. It means that more people than ever are experiencing the freedom, autonomy and enjoyment of working for themselves. But others have suggested that many people are self-employed now because they are struggling to find full-time employment. And that this could be leaving them at risk of falling into problem debt.

The struggle to survive

In the past, Citizens Advice has warned that the rise in self-employment actually means that more people are in unstable work.

The charity has warned that the self-employed are as likely to have debt problems as the unemployed, based on the number that visited a branch with debt queries over a three-month period.

Its finding is mirrored by the recent self-employed research we conducted with One Poll, which shows that self-employed people are more likely to experience serious personal money problems than employed people – and even more than unemployed people. In fact, self-employed workers owe on average 36.4 per cent more than those who are not self-employed.

And, of course, worrying about money and struggling financially can put a strain on anyone’s business, leading to lost profits and even more worry.

Rising debts

Worryingly, it’s not just that more people struggling with debt, the debts themselves are eating into a greater proportion of people’s earnings.

The TUC has warned that the number of households struggling with problem debt grew by a quarter between 2012 and 2014, with 3.2 million families spending at least 25% of their gross monthly pay servicing unsecured debts.

The report, commissioned by the TUC and Unison, showed that young people, the self-employed and low-income families reported the biggest increases in debt. It found that in 2012, 6% of self-employed workers with debts said they were in serious debt, but by 2014 that had risen to 17%.

Serious debt can quickly become unsustainable, so if you’re facing more repayments than you can afford then it’s time to get some help.

How we can help

If you want help dealing with your debts and finding the best way out of the red then it’s important to talk to someone that understands self-employment.

Our research also found that more than half (50.4 per cent) of self-employed people worry about money often or all the time. There’s nothing quite as miserable as money worries, so get in touch today so that we can help you find a path out of debt.

You can call us on 0800 280 2816 and speak to an adviser who understands your position. It’s free, even from mobiles, and confidential, so call us today.

Filed under Money Management Tips

This article was checked and deemed to be correct as at the above publication date, but please be aware that some things may have changed between then and now. So please don't rely on any of this information as a statement of fact, especially if the article was published some time ago.

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