Most employees and freelancers work five days a week on average with a similar number of contracted hours, however, freelancers are more likely to work overtime than employees and be out of pocket during the cost of living crisis, finds new research
The report’s survey revealed that freelancers work an average of 13.3 hours of paid overtime and 9.7 hours of unpaid overtime per week, whereas employees work 8.8 paid and 7.4 unpaid overtime hours on average.
Those freelancers surveyed however said they take more days off, reporting an average of 23.5 days of vacation per year compared to an average of 19.6 for employees. Over half (54%) of freelancers also said they take more holidays as a freelancer than they did when they were an employee.
However, that could be changing as the rising cost of living is being felt more by freelancers because they have more running costs to pay just to work, such as limited liability/indemnity insurance, utility bills, business software and accountancy services, to name just a few.
Freelancers working more unpaid hours during cost of living crisis
Freelancers are having to work more to pay the bills to ensure that they have enough cash flow to get them through any sparse periods of work. Higher corporation taxes and a lower tax-free dividends threshold will also see freelancers worse off in 2023.
According to a Vogue Business report, creatives working in the fashion industry are struggling with the cost of living crisis and being expected by some clients to provide more work for no extra pay.
The report highlighted that London-based fashion photographers are having to work longer hours for less money than ever before. Some commercial clients are requesting delivery of extra images and self-shot videos for shoots, which clients expect photographers to produce and style themselves. If those extra hours and skills are not paid for, freelancers are out of pocket.
Meanwhile, the report said that freelancers “more widely are finding budgets have gone down, just as the cost of living in the UK has gone up.”
IR35 is holding back earning power, pension pots, too
Freelancers that have been forced to take up inside IR35 roles in the past year due to hiring company blanket bans on PSC contractors would have seen their take-home pay cut on average by 30%.
Many would see the injustice of no longer being self-employed but having to pay more taxes with fewer benefits. They would see themselves becoming PAYE, but also be responsible for employers’ national insurance and the Apprentice Levy, alongside fees for umbrella company services.
The HMRC has found that self-employed workers that switched from a PSC to payroll in 2021-22 paid around £9,800 more in tax than those who did not switch in the period.
Once you are forced into umbrella company worker status you are also exposed to an unregulated industry and you automatically lose your earning power to take on more clients. With each new client you work for through a recruitment agcny there could be a different umbrella company you are forced to work with, which wreaks havoc on your pension contributions, according to St. James’ Place in this report.
To learn more about how IR35 rules and HMRC’s CEST tool are impacting freelancers, check out our IR35 section here.
The top five challenges of being a freelancer
Although many people understand the appeal of freelance work, most also recognise that it’s not without its own challenges, found the Remote report. The top five areas of concern for employees are finding enough work (66%), managing irregular income (62%) irregular work (60%), managing clients’ expectations (60%), and clients not paying (59%).
| Rank | Challenge | % of Employees who agree |
| 1 | Finding enough work | 66% |
| 2 | Managing an irregular income | 62% |
| 3 | Managing irregular work | 60% |
| 4 | Managing expectations with clients | 60% |
| 5 | Clients not paying | 59% |