New research from the Association of Independent Professionals and the Self Employed (IPSE) has today revealed that freelancers’ average quarterly earnings soared in Q4 2021 to its highest level since prior the EU referendum at £29,547 – up from £25,551 in Q3 2021. For context, the increase in quarterly rates marks an end to two years of COVID-19 uncertainty as the figure represents a doubling of incomes since the start of the pandemic in Q2 2020.
The report found that the increase in quarterly rates has been fuelled by the return of pre-COVID-19 levels of work in the self-employed sector. It revealed that freelancer capacity has continued to decrease this quarter, with self-employed workers experiencing the lowest average of weeks without work since Q4 2019. Moreover, the Freelance Confidence Index also found that day rates have increased from £535 in Q3 2021 to £584 in Q4 2021.
However, despite the rise in work and quarterly incomes, the report found that freelancer confidence in the UK economy has fallen dramatically from -13.2 in Q3 2021 to -19.1 in Q4 2021. The Freelancer Confidence Index found that this has largely been driven by the controversial reforms to IR35 in April 2021, which has remained the biggest detrimental factor impacting freelancers for the second quarter running.
Moreover, with inflation rising to its highest level in almost 30 years, the report found that a significant majority of freelancers (81%) are worried about the cost of living and are predicting rising business costs over the next 12 months.
Derek Cribb, CEO of IPSE said, “Today’s report shows that the self-employed sector is finally recovering after two years of COVID-19 uncertainty. Work opportunities, day rates and quarterly incomes are soaring towards pre-pandemic levels and freelancers are now able to make a living from self-employment again.
“However, despite this, freelancer confidence has continued to slump as IR35 acts as a sword of Damocles on the industry. The government, therefore, needs to step in and solve the confusion around IR35 if the sector is going to reclaim its position as one of the most dynamic and innovative parts of the UK economy.
“Self-employment can be a driving force for economic growth but if it is to realise its full potential, the sector must be supported by government policies that seek to encourage, not hinder, it’s natural vibrancy.”
Following two years of economic uncertainty and COVID-19 restrictions, the report found that almost 4 in 10 freelancers (38%) are in debt, with nearly 2 in 10 (16%) now accruing debt via credit cards issued in the name of their self-employed business. Concerningly, the number of freelancers reporting that they have no business debt in Q4 2021 (59%) is lower than the previous quarter (67%) – showing that more and more freelancers are unfortunately falling into debt.