Worst affected groups, including the self-employed, fear filing for bankruptcy and other forms of insolvency as debt problems spiral.
There were approximately 4.37 million self-employed people in the United Kingdom in the three months to January 2021. Self-employment in the UK had been growing steadily, from a low of just 3.2 million in December 2000, to a peak of over 5.03 million at the start of 2020.
But in the wake of the Coronavirus (COVID-19) pandemic, self-employment has fallen to levels not seen since the middle of 2015.
Unsurprisingly, millions of people are desperately worried about their finances during the current crisis. The sudden “income shock” that many professionals and business owners have experienced occurred without warning, and nobody can be certain how much longer it will endure.
Helplines have been inundated with queries from people wanting to know what their options are, including growing numbers of limited company directors and those who have started their own small businesses, but find themselves unable to access government support schemes.
The worst affected groups are already afraid that they will have to file for bankruptcy or another form of insolvency as their debt problems get worse.
The Founder of IVA Advice, Jay Mychalkiw said, “In the past, people who were struggling with debt would usually suffer in silence, before being dealt with by heavy handed debt collectors, bailiffs and the courts. There would be very little in the way of debt help, and bankruptcy would be looked upon in a very negative light.”
Jay added, “But thankfully, things have changed. IVA Advice will help you find easy, quick and confidential debt advice. We understand everyone is different, and debt issues vary from person to person. It is why we never advise to look at just one company for any debt solution. That can often lead to biased advice, and you might end-up paying back more than you need to. IVA Advice is 100% independent, and is a trusted authority in the debt industry.”
Survey data shows that 20% of currently self-employed workers think it likely they will leave the uncertainty of self-employment (Blundell et al, 2020), rising to 58% for those under 25.
The Office for National Statistics, estimates that almost 300,000 workers changed their status from self-employed to employee between the second and the third quarter of this year, the highest number since 2005.
And if the Chancellor was to potentially remove some of the tax incentives for the self-employed, it would push even more workers towards salaried employment, further compounding the disproportionate effects of the COVID crisis on self-employed people.