Research has emerged to suggest that as many as 40% of UK freelancers and contractors working in IT and technology roles can earn above the average national salary of an IT employee in just 90 days.
That independent workers have the opportunity to earn above employees in similar roles is well-known, but to be able to eclipse the average employee salary in as little as three months is quite something.
Qdos Contractor, the tax specialist behind the research revealed that 32% of independent workers surveyed earn between £501 - £700 per day, with 8% commanding day-rates of £701 and over.
With 40% of contractors earning £501 or above daily, the statistics suggest that if they were to work five days a week on a contract, it would take just 18 weeks to earn £45,000, above The Office for National Statistics’ average salary for a full-time IT employee, which sits at £44,665.
Of the 711 freelancers and contractors asked, 12% earn between £100 - £300 per day, 20% charge £301-£500 daily, while 28% earn anywhere between £401-£500. As mentioned, the remaining 40% enjoy day-rates of £501 and over.
While these statistics are thought-provoking, Qdos Contractor CEO Seb Maley was understandably keen to make the point that the research is not representative of the whole self-employed market.
“These figures represent a select group of highly-skilled, qualified IT contractors, and not the entire freelance market. But they do indicate that independent working – particularly in the IT industry – is career choice which brings with it the opportunity to earn more and the freedom to work how and when people choose,” he explained.
Compared to employment – which brings with it statutory benefits such as sick and holiday pay and employer pension contribution – self-employment is a career choice which comes with greater risks.
“In comparison to employment, self-employment will always bring with it added risks and less security, which in many respects counter balances what might well be perceived as expensive day-rates,” Maley went on to say.
While demand for freelancers and contractors has remained relatively strong recently, just-published APSCo data has shown an 11% drop in contract vacancies in the month of September. You could argue this further justifies contractors’ day-rates, as they negotiate though peaks and troughs in demand for their own services.
Despite this unusual drop in contractor vacancies, the opportunity to potentially earn more by working less has attracted millions to self-employment. The number of people working for themselves in the UK grew by 57,000 in the three months to August this year to reach a record 4.86million.
To truly enable the millions of self-employed people in the UK to thrive, sector exports have voiced concerns as to whether freelancers and contractors are actually able to maximise the amount of money they take home after tax. From recent tweaks to the current tax system, right through to radical and controversial IR35 reform, Mr Maley urged Government to think carefully about how tax affects the self-employed.
“Recent IR35 reform, and the prospect of further tax changes have left many contractors concerned over whether they will be inaccurately placed inside IR35 – a move which would see them pay similar taxes to employees, without receiving the same kind of benefits.”
Have you experienced an increase in earnings since going self-employed?