Alarm as self-employed bankruptcies hit four-year high

The number of self-employed people declaring bankruptcy has increased to its highest level in four years, new figures show.

In fact, not since the first quarter of 2015 have as many people who freelance or work for themselves entered bankruptcy, show the figures from the Insolvency Service.

Supporters of freelancers blamed a range of factors for some 990 self-employed bankruptcy filings between October and December 2018, including rising tax levies and Brexit uncertainty.

'Too little, too late'

Others, like insolvency body R3, pointed to inflation, saying that the drop in prices that sole-person businesses and consumers at large have started to see represents “too little, too late.”

“There are measures being taken by the government to help people in financial distress,” the body said.

“The breathing space for people in debt is due to be introduced in the next few years, and will give indebted people a two-month period free from creditor action to seek qualified advice as to the best way for them to resolve their situation.”

'Great concern'

But the help comes far too late for 1,000 or so sole traders, whose bankruptcy rate has leapt by 5.5% since the second quarter of 2018, and surged by 17.7% since 2017’s third quarter.

“It’s a great concern to see almost 1,000 self-employed individuals suffered from bankruptcies”, reflected the Federation of Small Businesses (FSB).

“Our latest figures have found that small businesses are having to spend 15% more on the likes of taxes, levies and employment obligations than they were six years ago.”

'Basic support lacking'

To come up with the percentage, FSB’s Mike Cherry explained that the cost of compliance for the typical VAT-registered trader was assessed and pitted against that same criteria's price tag in 2011.

But he also believes that, despite numbering some 4.8million, the UK’s self-employed army is struggling because they are denied “basic support in too many areas.”

Freelance body IPSE has accused the government of the same, saying that although self-employment has ‘done the heavy-lifting for the labour market,’ its practitioners face unwieldy, taxing policies such as Universal Credit and IR35 reform.

 

30th January 2019

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