TaxScouts, a tax management platform for the self-employed, has unveiled a significant surge in annual incomes among freelancers, signalling a positive shift in their financial landscape.
Data drawn from a sample of over 13,400 self-assessments of TaxScouts users spanning 2019 to 2023 indicates an impressive 12% growth in freelance income over the past year. This robust expansion stands ahead of the 7.8% increase in PAYE (Pay As You Earn) income, recently reported by the Office for National Statistics (ONS) and HMRC.
These findings spotlight the resilience and dynamism of the freelance ecosystem, which has thrived despite the challenges posed by the pandemic, widespread economic turbulence, and corporate downsizing. The analysis reveals that freelancers have experienced more than double (54%) the income growth of their PAYE counterparts, emphasising their vital contribution to the economy.
Despite positive momentum, the overall financial landscape for full-time freelancers remains marked by a substantial 32% income disparity in comparison to their full-time employed counterparts. During the period between April 2022 and 2023, TaxScouts reported an average annual income of £24,033 for full-time freelancers. In contrast, the average wage for employed workers in 2023 stood at £32,300, underscoring a significant discrepancy in annual earnings.
TaxScouts’ data aligns with the national average income for freelancers during the third quarter of 2022 – £25,887, according to the IPSE, a not for profit dedicated to the self-employed.
Amid economic uncertainty, many workers have gravitated towards permanent positions. Nevertheless, freelancers who have remained steadfast are now experiencing more favourable compensation across the board.”
“Embarking on a freelance journey requires time, dedication, and an embrace of uncertainty. And I see time and time again that financial management takes a back seat – particularly in the early days when people are getting into the swing of a new way of working. Issues like undercharging, payment delays, and expense management are common stumbling blocks for freelancers. Through the launch of our self-employed tax tools, we aim to nurture financial confidence and resilience, especially among those new to freelancing.”
Freelance creative strategist and performance marketing lead, Jade Downer, added: “The startups and scaleups I’m working with seem to favour working with freelancers right now because they don’t want to commit to hiring a full-team. In the eyes of a founder, it’s a good way to test out a new channel and get some traction before fully committing to building out a permanent team.
“For freelancers like me, it’s an ideal situation. We tend to favour flexibility and variety so are happy to plug talent shortages and offer specialist project support before happily moving onto the next project.”
“Compared to my previous full-time PAYE job, I’m earning way more and I’m working far less hours. While there are obviously concerns with the cost of living and a looming recession as someone who doesn’t have a tidy and consistent monthly salary, work seems to be coming in and rates are healthy.”