Self employment 2019

Understanding self-employment 
BIS Enterprise Analysis research report
2:Key findings• The majority of those in self-employment considered it a positive choice compared with
being an employee. The benefits reported most often were having flexibility,
independence, and job satisfaction.• This research did not find evidence of large numbers of people wanting to leave selfemployment; less than a fifth planned to leave in the next 3 years and over half of those
intended to retire.• 84% thought their life overall was better in self-employment compared with being an
employee and over half believe they are better off financially.• While a third believe they are financially worse off, most of these people appear to have
made a conscious choice to prioritise other factors with 74% of them saying their life was
better overall.• A minority of the self-employed reported facing big problems with lack of income when ill,
saving for the future, and difficulties getting a mortgage.• Relatively few of those who had left self-employment cited specific money problems, but
more security and more money were the main benefits they saw of becoming an
employee.
3Contents

4	Introduction
5	The research approach
6	Section 1: The nature of self-employment and routes in
13	Section 2: Plans for the future
20	Section 3: The financial situation of the self-employed
26	Section 4: Challenges of self-employment
32	Section 5: Support needs of the self-employed
37	Section 6: Leaving self-employment
42	References

4Introduction• This report presents the findings of a survey designed to provide valuable new evidence about the
self-employed population – why and how people to choose to enter and remain in self-employment,
how they view their situation, difficulties faced, and how they manage their life in self-employment.• The number of self-employed people in the UK increased by over half a million between 2010 and
2015, accounting for over a quarter of the growth in total employment over that period1.• Previous research2,3 has shown that self-employed people are a diverse group, so there are likely to
be many reasons for their choice of being self-employed. We would like to understand the reasons for
and the wider impact of this growth in self-employment.0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Thousands UK self-employed population 1992 to 2015Source: ONS Labour Market Statistics, September to November quarters 1992 to 2015
5The research approach• The survey was run with previous respondents to the Labour Force Survey, who had been selfemployed in their main job when last interviewed.• The fieldwork was conducted by ONS on behalf of BIS. 1,423 respondents gave complete interviews,
57% of the issued sample4.• The questionnaire covered a range of issues but the 195 individuals who reported they were no longer
self-employed in their main job were asked a shorter set of questions about the circumstances around
this.• To gain some insight about how self-employment compares with being an employee we asked
respondents about their beliefs and opinions, and in some cases invited them to compare selfemployment with a hypothetical ‘similar’ employee job.• The survey responses were weighted to the number of self-employed people in the Annual Population
Survey 2014 to make analyses more representative of the overall self-employed population.
6Section 1: The nature of self-employment and routes inA positive choice for the majority• People entered self-employment for a range of reasons, and there was often more than one factor
contributing to their decision. Most mainly thought of themselves as someone who runs a business.• The Global Entrepreneurship Monitor5 suggests relatively few people are entrepreneurs out of
necessity and the results of this research are similar – the most common circumstances for entering
self-employment were people seeing a business opportunity and it being normal for the type of work.• Reinforcing the findings of research by the Resolution Foundation6 and the RSA7 in 2014, we found
the majority of those in self-employment said they had more flexibility, independence, and job
satisfaction than they thought they would as an employee.• Most self-employed people had several or many customers in a typical month, and were not
dependent on a former employer when starting out.But for some it is less of a proactive choice and can be precarious• Although this research suggests self-employment is generally a positive choice, the self-employed are
not a homogenous group.• Around 6% were encouraged into self-employment by their (then) employer, although only half of
them relied on their former employer for work when actually starting.• 16% said a contributing factor to their choice was not being able to get an employee role they wanted.
7The decision to enter self-employment is more likely to be
driven by opportunity than necessity• The most common circumstances that contributed to taking up self-employment were it being normal
for the type of work, and people seeing a business opportunity.• Further analysis shows that 49% said more than one factor contributed to their decision.• 6% were encouraged into self-employment by their (then) employer, and further analysis shows that
around half of them relied on their former employer for all or most of their work when actually starting.0% 20% 40%
Opportunity to work around a health issue
Employer at the time wanted me to move into self-employment
Continuation of a family business
None of these
Could not get a job as an employee in type of work wanted and
in local area
Needed to work around childcare or other commitments
Previous job came to an end, including redundancy
Saw a specific gap in the market or business opportunity
Being self employed is normal for job doContributed to taking up current self-employment (all that apply)
8Most of the self-employed view themselves as business
people• Most self-employed people viewed themselves as running a business: 66% said it was the “main” way
they describe themselves, with a further 11% using this as a secondary description.• In total around a third described themselves as doing freelance work, and just over a fifth as a
contractor or sub-contractor. But these people were less likely to use this as the main description.0%
20%
40%
60%
80%
Main description I use All descriptions I useWhich of following best describe the nature of your self-employmentRunning own
business
Doing
freelance work
Sub-contractor
or contract
worker
Other
9The key motivations do not tend to be financial• At the time they were starting out, most self-employed people saw a number of advantages over being
an employee – on average people reported three benefits and 85% selected more than one.• The benefits reported most often were having flexibility, independence, and job satisfaction.• When asked about the main advantage, 46% said having more time or flexibility, with less than 10%
saying earning more money.0%
20%
40%
60%
80%
100%
All that apply Main advantageAdvantages of being self-employed rather than working as an employeeHave more independence Have more time or flexibility Get more job satisfaction
Earn more money Pay less tax None of these
10Most of the self-employed previously worked as employees,
or ran a different business• 63% were paid employees immediately before they took up their current self-employment, while 16%
were self-employed doing something else; 6% were not working and looking for work.• Women were less likely to have been in work and more likely to have been inactive.0% 20% 40% 60%
Retired
Not working and not looking for work
Not working but actively looking for work
In training or education
Self employed but doing something different or
running a different business
Working for an employerWhat doing just before started in current self-employed jobAll
Female
Male
11The majority do not rely on their previous employer to help
them get started• 21% did work for their previous employer when they were starting out, with 7% doing all their work
for their previous employer.• Further analysis shows around half of the latter group had been encouraged into self-employment
by their former employer.0%
20%
40%
60%
80%
100%Previously an employee: still did work or
business with or for previous employerNo work with previous
employer
Some work was with
previous employer
Most work was with
previous employer
All of work was with
previous employer
12A fifth start in self-employment while working as an employee• 19% started earning from self-employment while they were still a paid employee.0%
20%
40%
60%
80%
100%Previously an employee: earn money from selfemployment whilst still working for employerNo
Yes
13Most self-employed people have a range of customers in a
typical month – a minority depend on a main client• The number of clients self-employed people expected to have in a normal month reflects the diversity
of roles they hold – over 80% expected to have more than one client.• Less than 40% expected their “main” client to account for over half of their business in a month.• 14% expected all of their business in a month to come from a main client.• Further analysis shows 10% reported working exclusively for a single client – this group were no more
likely to say they were financially worse off in self-employment.0%
20%
40%
60%
80%
100%
Number of different clients in a normal
month
10 or more
4-9
2-3
1
0%
20%
40%
60%
80%
100%
Amount of business from main client
Do not have a
main client
Less than a
quarter
At least a quarter
At least half
At least three
quarters
All of it
14Section 2: Plans for the futureMost plan to stay in self-employment• Four fifths expected to be in self-employment for the next 3 years, with less than 1 in 10 planning to
leave within a year.• This is in keeping with BIS’s previous analysis3 of the LFS which shows only 5% of the self-employed
are looking for a different or additional job – less than the equivalent 8% of employees.The choice is not always between self-employment and an employee role• Over half of those planning to leave in the next 3 years said they will retire.• But around two fifths said they will seek an employee job – this is 6% of all those in self-employment.• Many of those 6% wanted an employee job to get more security, and this group were more likely to
say they were worse off in self-employment than they would be as an employee.Most self-employed people have no ambition to be employers• Just under a quarter said they had employees, which is similar to the wider business population.• Just under a fifth expected to take on employees.• Most of those without employees were just not considering it or said they don’t have enough work –
few of them mentioned more specific barriers.
15Most people in self-employment plan to stay for now• Over 80% of those surveyed expected to be in self-employment for at least the next 3 years, with less
than 1 in 10 planning to leave within a year.• Those aged 45 to 54 were least likely to plan to leave, and intentions increased with age past this
point – but even amongst those aged 65+ less than half planned to leave within a year.• People working part-time were much more likely to have plans to leave than those working full-time –
this will be driven by the fact1 that 45% of the part-time self-employed are aged over 55.0%
20%
40%
60%
80%
100%
All Male Female 16 to 34 35 to 44 45 to 54 55 to 64 65 and
over
Full-time Part-timeWhether expect to leave self-employment in next 3 yearsNo plans to leave in next 3 years In 2 to 3 years time In the next year
16And the majority of those planning to leave will retire• More than half of those who planned to leave in the next 3 years said they will retire.• Less than two fifths would be economically active – the 37% planning to leave and work for an
employer represent 6% of all those in self-employment.• The majority had no plans to leave but when asked to consider what they would do if they were not
self-employed, almost four in five thought they would be an employee.• However, 14% said they would be retired if they weren’t self-employed – meaning a fifth of all those in
self-employment either had firm plans to retire or would be retired if they did stop.0%
20%
40%
60%
80%
100%
All 16 to
34
35 to
44
45 to
54
55 to
64
65 and
over
Plan to leave in next 3 years: what expect to
be doingRetire
Take a break from
working for family
reasons
Take a break from
working to study
Other
Work for an
employer in a
voluntary or unpaid
role
Work for an
employer in paid
role0%
20%
40%
60%
80%
100%
All 16 to
34
35 to
44
45 to
54
55 to
64
65 and
over
No plans to leave: what would be doing if not in
self-employmentRetired
Not working and not
looking for work
In training or
education
Not working but
actively looking for
work
Working for an
employer in a
voluntary or unpaid
role
Working for an
employer in paid role
17The majority of those planning to become an employee are
motivated by more security or higher earnings• Looking further at the 6% of all self-employed who had plans to leave and take up an employee role,
when asked for the main reason for this a third said they wanted more security and around a fifth
because they would be financially better off.• Further analysis shows around half of those planning to become an employee said they were
financially worse off in self-employment – higher than the average of a third.• And just under a fifth of those planning to become an employee said life in self-employment is worse
overall, compared with less than 1 in 10 on average.0% 20% 40%
Being self-employed makes it harder to get
credit or a mortgage etc
Will have finished what I want to do in selfemployment
More fulfilling or want a career
Would be financially better off
Other
More securityLeaving in next 3 years: main reason why going to work as an employee
18Most self-employed people without employees do not plan to
take any on• Just under a quarter of those still in self-employment said they had employees, which is similar to the
wider business population.• One in ten non-employers expected to take on their first employee in future, while half of existing
employers planned to take on more people.• This research found that self-employed people were more likely to work together with other selfemployed people or businesses than to take on employees – see Section 5.0%
20%
40%
60%
80%
100%How many current employees50 or
over
10 to
49
5 to 9
2 to 4
1
None 0%
20%
40%
60%
80%
100%
All Does not currently have
employees
Currently has employeesIf not leaving in next year, expect to take on more or any
employees?No Yes
19And many don’t think being an employer is relevant to them• When those without employees were asked what was the main reason for this, almost half said they
had never thought about it or felt it wasn’t relevant to them.• A quarter said they did not have enough business.0%
10%
20%
30%
40%
50%
Never thought
about it or not
relevant
Not enough
business or
work
Other Too much risk
or
responsibility
Too much
extra cost
Cannot find
the right
people
Cash flow too
uneven
Too much
extra admin
Do not know
how to go
about it or too
complicatedMain reason for not having any employees
20Section 3: The financial situation of the self-employedThe self-employed feel their lives are better overall and over half think they are better off financially• 84% thought their life overall was better in self-employment compared with being an employee and
over half believe they are better off financially than they would be as an employee.• While a third believe they are financially worse off, most of these people appear to have made a
conscious choice to prioritise other factors with 74% of them saying their life was better overall.Most self-employed people have additional sources of income• Three out of five self-employed people in this study had multiple income streams – excluding benefits
and tax credits, but including a partner’s income.• Three quarters of those with additional income said it was not essential to them remaining in selfemployment.There seems to be acceptance that self-employment can be less remunerative for a minority• Just over 30% indicated that their earnings from self-employment did not allow more than a basic
standard of living – yet three quarters of these thought their life was better overall.And for others the income seems to be relatively discretionary• Almost 30% said they either used self-employment to fund luxuries or did not rely on the income at all.• A third of these people said they would be retired or inactive if not self-employed, or had specific plans
to retire.
21• Further analysis of the multiple response data showed that 63% of self-employed people in this study
said they had additional income streams – excluding benefits and tax credits.• 43% had additional income besides their partner’s income, benefits or tax credits.• For those aged 55 and above there was a substantial increase in the likelihood of having property
income, interest/dividends, or pension income, whereas the likelihood of drawing tax credits/benefits
or having income from a partner decreased.Most self-employed people have additional sources of
income0% 10% 20% 30% 40%
Other
Other employment or partnership income
State benefits
State pension
Tax credits
Trusts, interest or dividends
Rental or other property income
Private pension
None
Income from a partner or other family membersSources of income besides self-employment earnings (all that apply)
22Most people with other income sources would still choose
self-employment even if they didn’t have them• Three quarters of those self-employed people with other sources of income said they would still
choose to be self-employed even without that other income.• 17% said they would not, rising to 22% amongst women and 23% amongst those working part-time.0%
20%
40%
60%
80%
100%
All Male Female Full-time Part-timeHas other income source - would they choose to be self-employed if
did not have that other income?No
Not sure
Yes
230%
20%
40%
60%
80%
100%
All Male Female 16 to
34
35 to
44
45 to
54
55 to
64
65 and
over
Fulltime
ParttimeExtent to which I rely on my income from self-employmentI do not rely on this
income
Allows me a bit of
extra money for
luxuries
Allows me to
maintain the lifestyle I
expect
Allows a basic
standard of living and
not much more
Only have enough
income because get
tax credits and or
state benefits as wellThe income from self-employment appears to be relatively
discretionary for some, but some don’t have enough• Almost 30% said they either used self-employment to fund luxuries or did not rely on the income at all.• Further analysis shows a third of these people said they would be retired or inactive if not selfemployed, or had specific plans to retire/become inactive.• On the other hand, just over 30% indicated that their earnings from self-employment either do not
allow more than a basic standard of living or that they were reliant on benefits or tax credits.• Nonetheless, further analysis shows around three quarters of these people thought life overall was
better for them in self-employment than it would be as an employee.
24Most think life overall is better in self-employment• 84% thought their life overall was better in self-employment compared with being an employee, with
7% saying they were worse off.• 86% thought they had more job satisfaction, and 4% thought they had less.• Just over half thought they were financially better off, with a third saying they were worse off.• Further analysis shows that amongst those who thought they were financially worse off 74% thought
their life overall was better.0%
20%
40%
60%
80%
100%
Life overall Financially Job satisfactionBetter or worse off in self-employment compared to being an employee
doing something similarWorse off
About the same
Better off
25Most of those who are financially worse off still have no plans
to leave…• 4 in 5 of those who thought they were financially worse off in self-employment still had no plans to
leave in the next 3 years.• However, around 1 in 10 were planning to leave in the next year and this is around 3 times higher
than for those who thought they are better off.0%
20%
40%
60%
80%
100%
Better off Worse off About the samePlans to leave, variation with views on whether financially better
or worse off in self-employmentNo plans to leave
in next 3 years
Plan to leave in 2
to 3 years time
Plan to leave in
the next year
26Section 4: Challenges of self-employmentSome do experience big problems but they are not universal• Concerns have been raised that people in self-employment may be struggling with a lack of success
or wider challenges that employees do not face.• 56% experienced a ‘big problem’ in at least one area.The areas where more people report big problems tend to relate to planning• Overall 30% said that not getting paid when ill or taking time off was a big problem, and 26% had a
big problem with not being able to save enough for the future.• A fifth of respondents said not having enough customers or work was a big problem.But the majority do have some plans• Most had plans to cope with not earning when ill, but 15% do nothing besides try not to take time off.• 30% said they had a pension they were paying into while self-employed, similar to the RSA’s
analysis8 which also showed around half of employees were paying in to a pension.• Four in five said they had at least one source of income for retirement other than a state pension.The most common issues when applying for financial products are around mortgages• The RSA and others have raised particular concerns about the extent to which being self-employed
may be making it difficult for people to get mortgages.• This research found that around half of those applying for a mortgage in the last 5 years felt that being
self-employed caused difficulties with their application.• The survey did not identify the nature or extent of these difficulties, nor whether the self-employed
empirically experience more problems than employees, and further research may be needed here.
27Some do experience big problems but they are not universal• None of the issues that respondents were asked about was a big problem to more than 30% of the
self-employed. However, further analysis shows 56% experienced a ‘big problem’ in at least one area.• The areas where more people report big problems tended were not getting paid when ill or taking time
off (30%), and not being able to save enough (26%).• Further analysis is required to explore whether big problems in certain areas can cause wider issues –
for example, what is the impact of not having enough customers?• It would also be helpful to explore the extent to which employees also have some of these problems.0%
20%
40%
60%
80%
100%
Not getting
paid if fall ill or
take time off
Not being able
to save enough
for the future
Not having
enough
customers or
work
Not knowing
how much
income will
have from
month to
month
Not having
security of
being a paid
employee
Understanding
how to do
paperwork eg
tax rules and
reporting
Struggling to
balance work
and family life
Isolation or
working aloneExtent to which this is a problem of being self-employedNot a problem
Something of
a problem
A big problem
28Most people who say they have big problems still feel they
are better off in self-employment• Of the 56% who said they had at least one big problem, only around one in ten felt that life overall was
worse in self-employment – however, this was a higher rate than those without problems.• Around 40% of the group with at least one big problem thought they were financially better off, with a
similar number thinking they were financially worse off.• Further analysis showed having at least one big problem did not affect how likely people were to plan
to leave within the next year.0%
20%
40%
60%
80%
100%
People with any big problem People with no big problemsLife overall in self-employment compared to being
an employee, those with and without big problemsWorse off
About the
same
Better off
0%
20%
40%
60%
80%
100%
People with any big problem People with no big problemsFinancial situation compared to being an
employee, those with and without big problemsWorse off
About the
same
Better off
29Most do have a proactive plan for when they might be ill• While most self-employed people say they try not to take time off with illness, more detailed analysis
showed that for 15% this was the only thing they do.• Overall 63% said they had savings to draw on.• 35% of full-time people had insurance, compared with 15% of part-time people.• 43% of part-time people said they would rely on a partners income, compared with 30% of full-time
people.0%
20%
40%
60%
80%
Try not to take time
off with illness
Have savings Have insurance Rely on partners or
family members
income
Allow for it in rates
and price
None of the aboveHow plan for a potential drop in income when may be too ill to work
(all that apply)Full-time Part-time All
30Most people have some plans for retirement that do not solely
rely on a state pension• There was considerable variation in retirement planning activity by age – generally speaking the
oldest self-employed people were more likely to already have investments but less likely to be
currently paying in. Younger people were much more likely to say they were doing nothing at all.• Across all age groups 30% said they had a pension they were paying into while self-employed.• More detailed analysis showed that 21% had made no plans beyond relying solely on a state pension.• This is clearly a complex area and further research is needed to establish whether the overall value of
all the arrangements people make will allow them to be comfortable.0%
20%
40%
60%
Sell business
to fund
retirement
Rely on state
pension
Use partners
income or
pension
Have a
pension from
previous
employment
Have a
pension pay
into whilst selfemployed
Live on rental
or sales
income from
property I own
Have other
financial
investments
Have not
made any
plans
OtherPlans for funding retirement (all that apply)16 to 34 35 to 44 45 to 54 55 to 64 65 and over
31The most common issues when applying for financial
products are around mortgages• Over half of those applying for a mortgage in the last 5 years felt that being self-employed caused
difficulties with their application.• And around 1 in 5 of those applying for personal or business loans felt being self-employed caused
difficulties.• The survey did not identify the nature or extent of these difficulties, nor whether the self-employed
empirically experience more problems than employees, and further research may be needed here.0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
mortgage rental
accommodation
credit card personal loan business loan personal insurance business insuranceApplications made in last 5 years - respondents who thought being self-employed caused difficulties% yes of those applying in last 5 years % yes of all self-employed % no of all self-employed I have not applied for this in the last 5 years
32Section 5: Support needs of the self-employedThere does not appear to be a problem with support to set up in self-employment• The responses show that many people felt they already knew what they need to and the minority who
did look for support found something to help them.The responses suggest that support from family and friends can be important at certain times• Around 30% had relied on financial support from family and friends at key times, such as when
starting, and around a quarter on non-financial help.• Help with childcare was quite common, as it will be for those with employee jobs, but some selfemployed people had also received help with running the business.And there are small groups reliant on frequent financial and non-financial help• 4% rely on frequent financial help and 7% on frequent non-financial help.Working or co-operating with other self-employed people and businesses is common• Working or co-operating with others was widespread – 60% either worked as a team with others or
referred/shared clients with peers.• Just under half said they belonged to a network of some sort – these were mostly informal networks or
social media.Awareness of Automatic Enrolment is fairly high amongst employers• Over four fifths of the self-employed who were employers said they were aware of Automatic
Enrolment, but less than 1 in 10 were unsure whether it affected them.• Of the 38% overall who thought it did affect them, a fifth (or 8% of employers) expected it to be a big
problem.
33Most people can find support to set up if they need it• Less than half of self-employed people looked for support, and less than a third for formal support.• Most of those who didn’t look for support felt they already knew everything they needed.• Less than a quarter didn’t look because they didn’t know who or what to ask.• On average less than 1 in 10 felt their support needs were not met at all.0% 20% 40% 60% 80%
Did not know where to
look
Did not know what to ask
None of these
Did not know who to ask
Already knew everything
Why did not seek advice/support
(all that apply)
0%
20%
40%
60%
80%
100%Looked for advice or
support when setting upBoth
Informal
Formal
No
0%
20%
40%
60%
80%
100%
Formal Informal Both
How well needs for advice or
support met
Not met
at all
Met to
some
extent
Met well
34Support from family and friends can be important at certain
times• Around 30% had relied on financial support from family and friends at key times, such as when
starting, and around a quarter on non-financial help.• Within this 4% said they often relied on financial help, and 7% often relied on other help.• Of those taking non-financial support, 71% had help with childcare (which is also likely to be common
for people with employee jobs), while 34% received help with running the business.0%
20%
40%
60%
80%
100%
Financial support due to
not earning enough
Other types of support
Reliance on support from friends and family to
keep business running
No
Often through
the life of the
business
From time to
time through the
life of the
business
Initially to get the
business going
0%
10%
20%
30%
40%
50%
60%
70%
80%
Childcare Helping out in
the business
Advice on the
business
Other caring
responsibilities
Other
Type of non-financial support from friends and family
(all that apply)
35Working or co-operating with other self-employed people and
businesses is common• While only a quarter of self-employed people said they had employees (see Section 2), working or cooperating with other self-employed people was widespread: 60% said they did this in some form.• 46% said they worked on jobs as a team, and 27% referred people on or shared clients.• Just under half of all self-employed people said they belonged to a network of some sort with these
tending to be more informal.• Around 1 in 10 were part of a formal business network or chamber of commerce.• In contrast 29% used a social media network and 24% were part of an informal business network.0%
10%
20%
30%
40%
50%
Working on same jobs
or projects as a team
Referring people on or
sharing clients for
different jobs
NoEver work or co-operate with other self-employed
people or businesses (all that apply)0%
10%
20%
30%
40%
50%
60%
None Social media
network such
as Linkedin
Informal
business
network
Other form of
network
Formal
business
network
Local
chamber of
commerceBusiness networks that consider self part of
(all that apply)
36Awareness of Automatic Enrolment is relatively high, but
there are concerns about the potential impact• Less than a sixth of those self-employed who were employers said they were unaware of Automatic
Enrolment for pensions, and less than 1 in 10 were unsure whether it affected them.• Of the 38% overall who at this stage thought it would affect them, a fifth (or 8% of employers)
expected it to be a big problem.• 2 out of 5 expected it to be something of a problem – this is 16% of all employers.• Those who expected it to be a problem tended to have more than one concern.0%
20%
40%
60%
80%
100%
Not sure if it
affects me
Doesn't
affect me
Affects me
Not aware
of itAutomatic Enrolment awareness
amongst employers
0%
20%
40%
60%
80%
100%
Not a
problem
Something
of a problem
Big problem
Extent to which Automatic
Enrolment will be a problem0%
20%
40%
60%
80%
Cost of
contributions
Cost of
administration
Time required
for
administration
Do not
understand
Automatic
Enrolment
Other
A big problem Something of a problemExtent to which Automatic Problematic areas (all that apply) -
by extent to which Automatic Enrolment will be a problem
37
 Section 6: Leaving self-employmentCoverage• 215 of those interviewed for this study were not longer self-employed in their main job, having
changed their situation since their last LFS interview in 2014.• Just over half of this group were now in employee jobs, a quarter were retired, 13% inactive, and 4%
were not working but actively looking.Relatively few of those who had left self-employment cited money problems• Just over 1 in 10 said they were not making enough money (or the business was failing).• Conversely, 15% said they didn’t need the income.But more money or security were still the main attraction for those who had become employees• 28% said the main reason for becoming an employee was to be financially better off.• 19% said they wanted more security.It was fairly common to take an employee role with a former client• Almost a third of those now in employee roles were working for a business they had counted as a
client when self-employed, and 14% had left self-employment because of being offered a job on the
payroll by one of their clients.Those who left were more negative about problems, and tended to have more income sources• The people who had left self-employment were somewhat more likely to say they had big problems
than those who had stayed.• Very few said they had no income after leaving.
38Half of those no longer self-employed had become
employees, and relatively few cited money problems• Just over half of this group were now in employee jobs, a quarter were retired, and 4% were not
working but actively looking.• Just over 1 in 10 said they were not making enough money (or the business was failing).• But 15% said they didn’t need the income.0%
10%
20%
30%
40%
50%
Other Health problems
or too much
stress
Caring
responsibilities
Do not need the
income
Too old to carry
on working
Just wanted a
break
Business
failing/not
making enough
money
Needed or
wanted more
qualificationsFor those not now an employee, why no longer self-employed (all that apply)0%
20%
40%
60%
80%
100%Main activity now not self-employedNot working and not
looking for work
Not working but actively
looking for work
Retired
In training or education
Working for an
employer in a voluntary
or unpaid role
Working for an
employer in a paid role
39But more money or security are the main attractions of
becoming an employee• 28% said the main reason for becoming an employee was to be financially better off.• 19% said they wanted more security.• Further analysis shows 14% had left self-employment because of being offered a job on the payroll by
one of their clients.• And overall almost a third of those now in employee roles were working for a business they had
counted as a client when self-employed.0%
20%
40%
60%
80%
100%Reasons for leaving self-employment
for an employee jobOther
Self-employment made hard to
get credit card or mortgage
Finished what wanted to do in
self-employment
Wanted more security
Thought would be more fulfilling
or wanted a career
Thought would be financially
better off
Did not expect business to
survive
0%
20%
40%
60%
80%
100%When self-employed was organisation
now work for a client or customerNo
Yes an
occasional
client
Yes a main
client
40Those who leave self-employment were slightly more likely to
report big problems than those who stay• Generally, the people had left self-employment were slightly more likely to say they had big problems
than those who had stayed.• The largest difference was in the percentage saying handling paperwork was a big problem – this may
indicate that this is a group for whom self-employment ‘trade-off’ did not work.• Unsurprisingly in light of the reasons given for entering employee jobs, security and knowing they had
enough income were also seen as big problems more often.0%
10%
20%
30%
40%
Not knowing how
much income will
have from month to
month
Not getting paid if
fall ill or take time
off
Not having enough
customers or work
Not having security
of being a paid
employee
Struggling to
balance work and
family life
Not being able to
save enough for
the future
Isolation or working
alone
Understanding how
to do paperwork eg
tax rules and
reportingExtent to which this is/was a big problem of being self-employedStill self-employed Left self-employment
41Very few said they had no income after leaving selfemployment• The majority of people leaving had income from employment (or second job self-employment).• Overall those no longer in self-employment were more likely to report having other income sources
than those who were still self-employed – far fewer said they had no other income source.0%
10%
20%
30%
40%
50%
60%
Income from
employment or
selfemployment
Rental or
property income
Trust, interest
or dividends
State pension Occupational or
private pension
Tax credits State benefits Income from my
partner or other
family members
Other NoneSources of income for those still self-employed in main job and those who have left (all that apply)Sources of income besides self-employment earnings Other sources of income have now left main self-employment