What is Self-employment?

As the name suggests, self-employment simply means working for yourself rather than working for an employer. Self-employment is where someone earns their own income by working for themselves. Many self-employed people are also freelancers or contractors, while many employed people also earn additional income from self-employment (including side-hustles).

There are about 4.24m self-employed people in the UK (roughly 2.7m of them are men and 1.5m are women), which represents about 13% of the total UK workforce. Most self-employed people (56%) operate as sole traders or sole proprietors, while others work as ordinary business partners or they’re self-employed people who operate their business as a limited company. This is an entirely different legal structure/entity that offers protection from personal financial liability from debts should the business fail.

Sole traders pay tax via Self Assessment, which means they report their taxable income and costs to HMRC each year by filing a Self Assessment tax return. HMRC uses the information in the Self Assessment tax return to work out how much tax a sole trader owes.

The highest proportion of UK solo self-employed workers work in construction and building trades, followed by road transport drivers, then artistic, literary and media occupations, agricultural and related trades, elementary cleaning occupations and teaching.

The solo self-employed operate in all regions of the UK, but they’re most heavily concentrated in the South East, London and West Midlands. Together, these areas account for almost half (47%) of the UK’s total solo self-employed population.