UK's self-employment drive not just due to the gig economy

A new report by the Resolution Foundation has attributed the rise in UK self-employment to professionals in high-skilled, high-paying sectors as opposed to the gig economy and new technological benefits.

The study indicates the growth is being led by those “relatively privileged high-skilled, higher-paying sectors” including advertising and banking. It is the appeal of “considerable tax advantages” that is largely fuelling the rise of self-employment rather than the so-called gig economy.

The fastest-growing self-employment sectors are advertising (100% growth), public administration (90%) and banking (60%). The Foundation stated that despite the focus on Uber in recent times, the sector that includes taxis is up just seven per cent since 2009; compared with an overall growth of self-employment in the UK of 22%.

The Resolution Foundation claims the rise of high-paying “privileged” sectors is due to the significant tax advantages of self-employment. It says a self-employed worker costing a business £100,000 receives over £7,000 in tax advantages over a full-time employee on similar wages.

However, a self-employed professional costing a firm £10,000 receives a tax advantage of just £200, while missing out on a string of employment rights and benefits.

The Foundation believes the Taylor Review of Modern Employment must “look again at the tax regime for self-employment”.

Adam Corlett, Economic Analystat The Resolution Foundation, said: “With the number of self-employed workers approaching five million, we need to start addressing some of the challenges it brings.

“This should include more security for workers at the bottom end of the market, but reforms should also reduce the unfair tax advantages that the wealthy self-employed particularly benefit from.”

Last updated: 28th February 2017