Exclusive research by self-employment trade body, IPSE, has found that Covid could have a long-term “devastating” impact on the UK’s £300billion freelance sector.
It revealed that overall, more than two-thirds of freelancers have been negatively affected by the pandemic, with the average drop in turnover totalling 60 per cent.
Almost 1 in 10 (9%) saw a significant drop in turnover of over 90 per cent and 2 in 5 (42%) have lost more than 40 per cent of their income.
According to the study, the financial damage the pandemic has caused varied depending on gender, age and business structure.
Nearly two-thirds (62%) of sole traders saw their turnover fall compared to 55 per cent of limited company directors.
However, the research highlighted that for limited company directors who did experience a fall in income, the damage was significantly greater. More than half (56%) saw their turnover decrease by over 40 per cent, compared to 46 per cent of sole traders.
Almost two-thirds (62%) of freelancers aged 35 and above saw their turnover fall in comparison to those under 35 – half saw a decrease.
Meanwhile, 43 per cent of self-employed men said their turnover dropped significantly compared to 36 per cent of women.
IPSE’s research also stated that the gaps in government Covid support were also a factor in the financial damage suffered by freelancers.
It claimed that although the Self-Employment Income Support Scheme (SEISS) offered support to 3.4 million people, the 1.6 million excluded led most (52%) freelancers to say they did not feel supported by the government. This figure jumped to 67 per cent among limited company directors who are excluded from SEISS.
The financial impact of the pandemic, the study revealed, has led to a quarter of freelancers considering leaving self-employment, while eight per cent reported actively seeking an alternative way of working.
A further 1 in 5 (17%) said they would leave self-employment if a permanent job opportunity came up, with nearly half (43%) of these saying they believed they could earn more as an employee.
Another 2 in 5 (40%) said they wanted the security of employment and a third (35%) would like access to benefits such as sick pay.
Andy Chamberlain, Director of Policy at IPSE, said: “This research shows the true, long-term financial impact of the pandemic on the self-employed sector, which contributed over £300billion a year to the economy before the pandemic.
“The damage of the pandemic was refracted through the government support on offer – or rather, the lack of support for a significant proportion of the sector. This is reflected now in the many freelancers who simply do not feel the government supports them or their way of working: particularly limited company directors.
“Limited company directors feel persecuted by the government right now not only because they were completely excluded from the SEISS grants, but also because of the changes to IR35 taxation.”