According to Government statistics, by the fourth quarter of 2019 (October-December) there were more than 5 million self-employed people in the UK. This has risen from 3.2 million in the year 2000. By the end of last year, self-employed people represented 15.3% of employment up from 12% in 2000.
For those who are self-employed, the impact of coronavirus on their business may have been immediate and have felt very personal. Previously successful operations have seen their income dry up in a matter of days or weeks; particularly badly affected have been those who rely on the events industry, hospitality, the arts and leisure.
Government was swift to introduce support systems to help those self-employed people who were significantly affected, for example via the self-employment income support scheme (SISS), interest free loans and business rates rebates. According to government figures, more than half of the five million self-employed workers in the UK have claimed a SISS grant, worth a total of £7.8bn. However, some businesses failed to meet eligibility criteria whilst others still struggled – and continue to struggle - to make ends meet. Sadly, many businesses have collapsed and may never rise again.
The problem has been exacerbated by the fact that nearly a fifth (17%) of self-employed workers in the UK have no personal savings to fall back on in times of financial crisis. A further 14% have less than £2,000 in savings.
It is worrying also to note that fewer than 10% of all self-employed workers protect themselves with any form of insurance against loss of income due to sickness or as a result of an accident. It could be argued that these policies are especially important for the self-employed who do not have the back-up provided by many employers should these eventualities arise.
People generally spend a lot of time and money insuring their property, pets, mobile phones and other precious items. It’s curious, therefore, how few invest in income protection policies. The reasons are complicated – maybe it’s due to a perception that policies are expensive or perhaps people don’t feel the policies are relevant to their situation. But failure to insure against potential risk can leave the self-employed in particular and their dependants very exposed.
None of us could have predicted the arrival of Coronavirus on our shores and the significant effect it would have on the economy and on many of our livelihoods. However, whether you’re self-employed, employed, semi or fully retired, making sure you have sound financial plans and protection in place can help to mitigate many risks.
If you would like help to review your current financial situation, please do contact us. Our expert financial advisers can guide you through your options, including ensuring you have the right cover in place to protect both you and your loved ones against the most common risks.
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