Report shows financial impact on freelancers, particularly women

A new report from IPSE and Starling Bank shows how Covid has hit freelance finances, with women worst affected by late payments.

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One million UK freelancers have been pushed into debt since the pandemic hit, according to a new report which finds that women freelancers have been hardest hit by late payments leading to lack of income and mental health issues.

The report by IPSE (the Association of Independent Professionals and the Self-Employed) and digital bank Starling found that one in four (23%) freelancers have had to take on credit card debt to get by and one in seven (14%) have used their overdrafts. More than a quarter (27%) have used up their savings. A fifth (18%) say they will need to borrow money to pay their tax bill, while 47% of freelancers say that they have been putting money aside throughout the year to prepare for their next tax return.

IPSE says Britain’s freelance population numbered five million in March has since shrunk to 4.56 million due to Covid-related problems around commissions, leading to a big drop in earnings.

The research showed only a third of sole traders have accessed the Self-Employment Income Support Scheme while just a fifth (22%) of limited company directors have accessed support through the furlough scheme, although 44% of freelancers haven’t had to use their savings or turn to borrowing or other support (aside from government schemes) since Covid hit.

Over a third (36%) of the self-employed said that instances of late payment have increased during Covid and over a quarter (28%) have been paid late by a client during the pandemic. One in six (17%) freelancers find themselves with no money to cover work-related expenses or basic living expenses (15%) as a result. Half (48%) of those who had been paid late said it left them feeling stressed or anxious and a third (31%) said they lost sleep over it.

IPSE says women freelancers are likely to be worst affected by late payments as they are more likely than men (67% vs 52%) to have encountered this issue with clients. Women also reported late payments having a worse effect on them and were more likely to say that it led to them feeling stressed (56% vs 45%) and losing sleep (39% vs 26%). They were also more likely to find that late payments had left them with no money to cover work-related expenses (23% vs 15%) and even basic living costs (22% vs 11%).

Chloé Jepps, Head of Research at IPSE, said: “Before the pandemic, female freelancers were often in a less secure financial position than their male counterparts (in large part because of the gender pay gap). Now, poor payment practices are making the situation even worse, disproportionately affecting their finances and even mental health.”

She called on the government to also look at new and longer-term ways to address the freelancer financial crisis: particularly the damage done by late payment and the disproportionate taxes.

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