New research from a leading provider of insurance, tax and IR35 advice for contracting professionals has found that most freelancers and contractors plan to continue “flying solo” as one-person enterprises in 2018, and do not intend to expand their operations to include additional staff.
The study by Qdos Contractor found that 70% of the freelancing and contracting professionals polled plan to continue in 2018 and beyond as a one-person enterprise, while just 25% hope to scale their enterprises up.
Noting a prevailing misconception that many contractors and freelancers will eventually expand their one-person enterprises into larger companies, Seb Maley, Qdos Contractor’s CEO, said:
“This simply isn’t true, and is reflected by the vast majority of independent workers who plan to continue working as one-person enterprises in 2018 and onwards.
“Given that large numbers of freelancers have no interest in scaling their company, Government policy must reflect this. It’s time for a tax system that worked in favour of those risking more, working individually and without many statutory employment benefits.”
Although not included in the research, this is also reflected in the large number of contractors who choose to work as independent professionals via Umbrella Companies, which by definition they are unable to scale up as they do not belong to them. Their interest is in delivering their services flexibly and achieving an optimum work-life balance.
The Qdos survey also asked respondents about the age they hope to retire at. The data shows:
- 48% hope to retire between 61 and 70
- 35% hope to do so between 51 and 60
- 10% hope to do so aged over 71
- 6% hope to do so between 41 and 50
- 1% hope to do while under 40 years of age
Mr Maley observed that as nearly half of the independent workers surveyed hope to retire at an age similar to the UK retirement age, contracting and freelancing appear to be “a sustainable career choice.” He added:
“Despite the clear challenges of working without employer’s pension contribution, freelancers can in many cases command day rates to stop working at a similar age to the average UK employee.”
Contractors working through Umbrella Companies, who were not included in this study, will usually benefit through their payroll provider’s pension auto-enrolment scheme. While they are taxed as employees on a PAYE basis, those working though reputable, compliant Umbrellas also benefit from the full range of statutory employment entitlements, including paid annual leave, maternity or paternity leave and paid sick leave.