A new piece of research from Qdos Contractor has revealed that 47% of freelancers say a lack of security is the most challenging part of freelancing or contracting. They asked 714 UK-based freelancers and contractors.
There’s no guarantee of income or financial security as a freelancer. This is usually the main factor that discourages people from going freelancer or becoming a contractor. Even if you’ve got work coming in, there’s no guarantee that a client will pay on time or even at all.
Besides job security, 32% said that the worst part of freelancing was the complicated tax system, particularly IR35 legislation. 10% said it was separating work and personal life. This is especially difficult for people who work from home which is the set up that most freelancers have.
5% said that isolation was the hardest part as most freelancers will work alone. 6% highlighted other areas like planning holidays and having a lack of professional respect from clients. Others said “irrational Government decisions” was another source of difficulty.
Seb Maley, CEO of Qdos Contractor said: “Freelancing and contracting offers the opportunity for greater freedom, control and independence, but unfortunately does not bring those brave enough to strike out alone a huge amount of security. That said, ongoing skills shortages in the UK, and the changing nature of work means that demand for independent workers is consistently strong.”
Less freedom than assumed
While freelancing offers a sense of freedom not found in traditional work, it’s never as simple as this. Running a business doesn’t leave you with a lot of free time so you could end up working more than you did back when you had a job. As well as client work, you have to put a lot of hours into finding new clients and keeping your business running.
One of the downsides to working for yourself is that you don’t get the same benefits that you would if you had a traditional job. Things like sick pay, maternity leave and holiday pay are only possible if you pay for them yourself.
“In the past, independent workers have been able to enjoy certain, but limited tax advantages when working through their own companies. These would somewhat balance out the risk of self-employment, and the lack of security and employee-like benefits such as holiday, illness, maternity and paternity pay,” Maley said.
IR35 reform has caused a lot of upset and confusion. It may have helped some independent workers who have so far been exploited by companies, but it’s not good news for everyone.
For many contractors who are classed as within it, this has negatively affected their business as now they are subjected to PAYE and lose money from their fees. The benefits in exchange are often unwanted or non-existent but they have little control over whether they are classed within it. This has already seen many public sector contractors head towards the private sector for more control over the way they do business.
Maley said: “In many cases, established contractors can be satisfied working without employee-like benefits, and the lack of security is simply part and parcel of self-employment. However, recent changes to the tax system, which includes IR35 reform and the slashing of tax free dividend allowance have both reduced the benefits of working independently, without the offer of anything in return.
“It’s important that the government focuses on building a fairer environment for those working independently, and one where the benefits of self-employment balance the risk and lack of security.”
What is the most challenging part of freelancing for you? What would you change about it? Let us know what you think.