Self-employment in the UK has grown steadily over the past 20 years, changing how people approach work. More Britons are choosing to work for themselves, driven by shifting career priorities, the need for flexibility, and financial reasons. Understanding the rise of self-employment means looking at the trends and key factors behind this shift in the job market.
Professional Saver has been offering insurance for self-employed professionals for 40 years. We know that as self-employment grows, having the right insurance is more important than ever. Whether you’re a freelancer, consultant, or small business owner, our policies can cover the unique risks you face.
What Do the Numbers Say About Self-Employment in the UK?
According to the Office for National Statistics (ONS), self-employment in the UK has changed a lot in recent years. Before the pandemic, over 5 million people were self-employed, making up about 15.3% of the workforce. But this number dropped to 4.2 million by late 2021 during the pandemic. As of January 2025, self-employment has partly recovered to around 4.39 million but is still below pre-pandemic levels.
Number of Self-Employed by Age Group
Self-employment rates vary by age, with older workers being more likely to work for themselves. Here’s a breakdown:
| Age Group | % of Self-Employed | Key Trends |
| 16-24 | About 5% | Lowest rate; growth linked to gig work. |
| 25-49 | About 10.9% | Moderate rate; steadily increasing. |
| 50-64 | About 17.5% | High rate; often a second career choice. |
| 65+ | About 34.4% | Highest rate; linked to delayed retirement. |
Note: These figures are estimates and may differ in specific situations.
Popular Industries for Self-Employment
Most self-employed workers are in:
- Construction – A major sector for self-employed tradespeople.
- Professional services – This includes consultants, accountants, and legal professionals.
- Creative industries – For example, writers, designers, and artists.
- The gig economy – This is growing among younger workers with roles in delivery, ride-sharing, and freelance digital services.
Regional Trends in Self-Employment
London has the highest self-employment rate, with about 16.5% of workers being self-employed. This is compared to the UK average of 13.1%. Other areas with high rates include the South East and South West, where freelancers and independent workers are common.
Self-employment remains a key part of the UK job market. While numbers have rebounded since the pandemic, challenges like financial instability, lack of benefits, and economic uncertainty still affect self-employed workers. However, the trend of flexible, independent work continues to shape the future of employment.
Why Are More People Choosing Self-Employment?
The rise in self-employment is driven by both personal choice and job market changes. Some key reasons behind this trend include:
Greater Autonomy and Job Satisfaction
Many self-employed people feel happier with their work compared to employees. The biggest benefit is having control over their careers, including:
- Choosing which projects to work on
- Setting their own hours
- Deciding where to work
- Managing their own career growth
For many, this flexibility is worth the financial risks that come with self-employment.
Economic Necessity and Labour Market Changes
Self-employment isn’t always a choice. After the 2008-2009 financial crisis, many people became self-employed due to job losses and fewer full-time positions. In recent years, businesses have also started hiring more contractors instead of permanent staff.
The pandemic sped up these changes. As remote work became common, many employees saw the chance to work independently – often with more flexibility and higher earning potential.
What Challenges Do Self-Employed Workers Face?
Despite its appealing aspects, self-employment comes with challenges that anyone considering this path should carefully evaluate:
Unstable Income and Financial Uncertainty
Unlike employees with steady pay, self-employed workers often deal with irregular income. Self-employed earnings can be lower than employee wages, though this depends on the job and experience. This unpredictability makes budgeting and financial planning more difficult.
Limited Social Protection
Self-employed workers don’t get the same protections as employees, such as:
- Sick pay
- Paid holidays
- Pension contributions
- Maternity/paternity leave
- Unemployment benefits
Because of this reduced social insurance, you need to plan ahead and arrange your own financial safety net.
Administrative Burden and Regulatory Compliance
You must manage your tax affairs, typically through Self Assessment. This includes:
- Registering with HMRC
- Maintaining accurate financial records
- Submitting annual tax returns
- Making payments on account
- Understanding complex tax rules and allowances
These administrative responsibilities require time, knowledge, and often professional assistance.
How Does Insurance Support the Self-Employed?
Without the benefits that employees receive, self-employed workers need financial protection. Insurance can help reduce risks and provide security.
Professional Indemnity Insurance
If you offer advice or professional services, professional indemnity insurance is essential. It can protect against claims for mistakes, negligence, or poor advice.
Public Liability Insurance
If you work with clients, suppliers, or the public, there’s always a risk of causing injury or property damage. Our public liability insurance can cover up to £5 million, protecting you from large compensation claims and legal costs.
Business Contents and Equipment Cover
Many self-employed workers rely on expensive tools and equipment for their jobs. We offer business contents and equipment cover for theft, damage, or loss, so you can keep working without major disruptions.
Is Self-Employment Right for You?
Before joining the growing ranks of the self-employed, you need to consider your circumstances:
Financial Readiness
Successful transition to self-employment means being financially ready. It’s important to have savings to cover 3-6 months of expenses, know your minimum income needs, and estimate how much you can realistically earn. Having a plan to manage irregular income can also help you stay financially stable.
Skills Assessment
Beyond your core professional skills, you need to manage finances, market your services, build client relationships, and stay organised. Strong networking and self-discipline are also essential for success.
Tax and Legal Structure
Choosing whether to be a sole trader, limited company, or partnership affects your taxes, liability, and paperwork. It’s important to get professional advice before making this decision.
Supporting the Self-Employed Journey
Self-employment in the UK brings both opportunities and challenges. It offers higher levels of freedom and job satisfaction, but also comes with financial risks and legal responsibilities.
At Professional Saver, we make it easier with insurance designed for self-employed professionals. Our policies start at £54 per year, with monthly payment options for policies over £125. Our experts have helped self-employed workers in many industries, giving them the protection they need to confidently grow their businesses. Get your quote today and count yourself among the self-employed sooner.
