Research and analysis

Research with self-employed Universal Credit claimants: Wave 1

Updated 5 April 2024

Report number: 88

A report of research carried out by Ipsos on behalf of the Department for Work and Pensions: Juliette Albone, Emily Mason, Iona Gallacher.

1. Introduction and Methodology

Policy context

This research presents key findings from a survey of self-employed Universal Credit (UC) claimants. Self-employed (SE) workers on a low income may apply for support from Universal Credit. If a claimant is gainfully self-employed (their self-employment is their main activity and is regular, organised, developed and carried out in expectation of profit), UC payments are calculated using an assumed level of earnings called a Minimum Income Floor (MIF). At the time of this research, due to the COVID-19 pandemic, the tests to assess gainful self-employment (i.e. the gateway interviews) were temporarily suspended and the MIF was not applied to UC claims.

Background and objectives

The aim of this research was to understand claimants’ experience of being self-employed and claiming UC. The research focused on two distinct groups of claimants which were kept separate for the purpose of this research:

1. Existing claimants who started claiming UC as a self-employed person before 16th March. This group had been assessed by Jobcentre Plus for their self-employment, had attended a gateway interview, and may have had the Minimum Income Floor (MIF) applied.

2. New claimants who started claiming UC as a self-employed person on or after 16th March. This group won’t have been assessed by Jobcentre Plus for their self-employment as gateway interviews and the Minimum Income Floor (MIF) were suspended due to Covid-19.

This survey is the first of two waves. The key objectives of this research were to:

• understand who the existing and new claimant groups were and the nature of their self-employed work;
• understand claimants’ plans, barriers, and support needs to make the most of their self-employed work, and the differences between groups.

Sample and method

5,159 existing UC claimants and 5,062 new UC claimants completed the online or telephone survey between 18th September and 2nd November 2020.

The sample was provided by DWP. The full population of existing claimants were invited to take part in the survey, whilst for new claimants a sample was invited.

Data has been weighted by age, gender, whether they have children, and single/couple claim.

Segmentation

Both existing and new UC claimants have been segmented into one of five groups. Cluster analysis was undertaken on eight attitudinal statements measuring respondents’ interest in self-employment, knowledge of sources of advice and guidance to support self-employment, as well as their own financial health.

2. Nature of self-employed groups

The main source of earning money for both existing and new claimants is through their self-employed work.

Which, if any, of the following are you currently doing to earn money?

Work status	Existing claimants	New claimants
Self-employed work only	87%	79%
Working for an employer only	1%	2%
Doing both self-employed work and working for an employer	4%	6%
Not in any paid employment or self-employed	8%	14%

Base: All existing claimants (5,159), all new claimants (5,062).

Half of existing claimants are business owners or directors, and the majority are relatively new to self-employment (less than 2 years).

Which of the following describe any self-employed work you do?

Type of self-employment	Percentage
Business owner/Director	50%
Freelancer	33%
Sub-contractor with fixed schedule	12%
Work shifts of varying lengths and timeslots for another buisness	12%
Other	4%

Base: All Existing Claimants, excluding not started SE work (5,138).

How long have you been self-employed in your current line of work?

Time self-employed	Percentage
Under 12 months	25%
12 months to less than 2 years	30%
2 years to less than 3 years	11%
3 years to less than 5 years	11%
5 years or more	22%
For less than 2 years - existing claimants	55%

Base: All existing Claimants, excluding not started SE work (5,138).

New claimants are mainly business owners / directors or freelancers, and nearly half have been self-employed for 5+ years.

Which of the following describe any self-employed work you do?

Type of self-employment	Percentage
Business owner/Director	41%
Freelancer	35%
Sub-contractor with fixed schedule	23%
Work shifts of varying lengths and timeslots for another buisness	10%
Other	8%

Base: All new claimants, excluding not started SE work (5,044).

How long have you been self-employed in your current line of work?

Time self-employed	Percentage
Under 12 months	12%
12 months to less than 2 years	16%
2 years to less than 3 years	10%
3 years to less than 5 years	15%
5 years or more	47%

Base: All new claimants, excluding not started SE work (5,044).

A fifth of existing and new claimants are self-employed in domestic, utilities, and vehicle services.

What is your main self-employed work? / What was your main self-employed work, when you were last self-employed?

Type of current/last self-employment	Existing claimants	New claimants
Domestic/utilities/vehicle services	21%	20%
Transport/distribution/delivery	17%	13%
Professional services	15%	11%
Manufacturing/construction/engineering	9%	15%
Personal services/beauty/sport and fitness	9%	10%
Social care/healthcare/education/childcare	8%	8%
Media/telecoms/arts	7%	13%
Retail/sales	4%	2%
Food/drink/hospitality/leisure	5%	5%
Animals/agriculture	2%	2%

Base: All existing claimants, excluding not started SE work (5,138); all new claimants excluding not started SE work (5,044).

Over the last two months, around half of existing and new claimants have been experiencing a form of financial difficulty.

Thinking about the last two months, which one of the following statements best describes how well you have been keeping up with your bills and credit commitments? This is both within and outside your job.

Ability to pay bills	Existing claimants	New claimants
Keeping up – no difficulty	12%	13%
Keeping up – struggle from time to time	30%	31%
Keeping up – constant struggle	24%	28%
Falling behind – some bills	15%	13%
Falling behind – many bills	13%	11%
No bills or commitments	1%	1%
Constant struggle/falling behind	52%	52%

Base: All existing claimants (5,159); all new claimants (5,062).

3. Motivations & attitudes to self-employed work

For existing claimants, the most common motivation for self-employed work is flexibility.

What motivated you to take up this self-employed work, rather than doing a different self-employed activity or increasing your employed work? / What motivated you to take up this self-employed work, rather than doing a different activity or working for an employer?

Reason for going self-employed	Percentage
Flexibility	48%
Personal circumstances	37%
Financial or economic reasons	30%
To do with the line of work	25%
COVID-19/coronavirus/lockdown	8%
Other reasons	40%

40% of existing claimants said ‘Other reasons’ motivated them to take up self-employed work. This included:

• 20% who wanted to start their own business
• 12% who reported self-employment activity as a personal hobby
• 7% who wanted to try something new

Percentages on the graph are top net values. Net values are percentage values for each response summed to broader categories.

Base: All existing claimants, excluding not started SE work (5,138). Totals may not sum due to rounding.

Breakdown of reasons for existing claimants

Flexibility

48% of self-employed claimants reported flexibility as a motivation. More specifically:

• 33% wanted more flexible hours generally
• 32% wanted to be independent / wanted to be their own boss / liked the freedom / making their own decisions
• <1% wanted to work from home
• <1% wanted to give up commuting / travelling / driving such long distances to get to work

Personal circumstances

37% of self-employed claimants reported personal circumstances as a motivation. More specifically:

• 24% were working around childcare or other caring commitments
• 12% worked around a health issue
• 2% joined the family business
• 1% were unhappy in their previous job / didn’t like their boss / co-workers

Base: All existing claimants, excluding not started SE work (5,138).

Subgroups of existing claimants most likely to be motivated by flexibility.

Some groups more likely to be motivated by flexibility are:

• Female claimants (53%)
• 25–34-year-olds (53%)
• Those with children (50%)
• Those with a mental health condition (52%)
• Those working in transport / distribution / delivery (55%)
• Those in personal services / beauty / sport & fitness (53%)
• Those who work shifts of another business (54%)
• Freelancers (53%)
• existing claimants who reported high (50%) and some (48%) control over their work, compared to those who reported no control over their work (37%).

Base: All existing claimants, excluding not started SE work (5,138).

Subgroups of existing claimants most likely to be motivated by personal circumstances.

Some groups are more likely to be motivated by personal circumstances:

• Female claimants (52%)
• Those with children (40%)
• 35–44-year-olds (40%)
• Those with a physical health problem or disability (52%)
• Those with a mental health condition (55%)
• Those working in animals / agriculture (49%)
• Those in personal services / beauty / sport & fitness (45%)
• Business owners / directors (41%)
• Freelancers (41%)
• Those with high control over their work (40%)

Base: All existing claimants, excluding not started SE work (5,138).

For new claimants, the most common motivation for self-employed work is flexibility.

What motivated you to take up this self-employed work, rather than doing a different self-employed activity or increasing your employed work? / What motivated you to take up this self-employed work, rather than doing a different activity or working for an employer?

Reason for going self-employed	Percentage
Flexibility	45%
To do with the line of work	36%
Financial or economic reasons	30%
Personal circumstances	21%
COVID-19/coronavirus/lockdown	9%
Other reasons	37%

Percentages on the graph are top net values. Net values are percentage values for each response summed to broader categories.

Base: All new claimants, excluding not started SE work (5,044).

Breakdown of reasons for new claimants.

Flexibility

48% of self-employed new claimants reported flexibility as a motivation. More specifically:

• 33% wanted to be independent / wanted to be their own boss / liked the freedom / making their own decisions
• 29% wanted more flexible hours generally
• <1% wanted to work from home
• <1% wanted to give up commuting / travelling / driving such long distances to get to work

To do with line of work

36% of self-employed new claimants reported ‘to do with my line of work’ as a motivation. More specifically:

• 33% reported it was normal for their line of work
• 4% reported their boss preferred them to be self-employed

Base: All new claimants, excluding not started SE work (5,044).

Subgroups of new claimants most likely to be motivated by flexibility.

Some groups of new claimants more likely to be motivated by flexibility are:

• 25–34-year-olds (49%)
• Female claimants (47%)
• Those working in transport / distribution / delivery (57%)
• Those in professional services (52%)
• Those in personal services / beauty / sport & fitness (52%)
• Those who work for another business (53%)
• Freelancers (51%)
• Business owners / directors (47%)
• Claimants with high (48%) or some (45%) control over their work, compared to those who report no control (28%).

Base: All new claimants, excluding not started SE work (5,044).

Subgroups of new claimants most likely to be motivated due to their line of work.

Some groups of new claimants more likely to be motivated by their line of work are:

• 17–24-year-olds (50%)
• Those with no children (39%)
• Those in media, telecoms, arts (64%)
• Those in personal services / beauty / sport & fitness (43%)
• Those with pre-tax profits before lockdown £1000+ (41%)
• Freelancers (44%)
• Subcontractors (43%)

Base: All new claimants, excluding not started SE work (5,044).

Lockdown has impacted the number of hours spent on self-employed work per week for both existing and new claimants.

Existing claimants

Hours a week	Before March	Current
0 to 10	9%	16%
11 to 20	14%	16%
21 to 30	16%	15%
31 to 40	24%	18%
41+	23%	18%

New claimants

Hours a week	Before March	Current
0 to 10	5%	16%
11 to 20	8%	12%
21 to 30	11%	11%
31 to 40	27%	20%
41+	34%	22%

Base: All existing claimants, excluding not started SE work (5,138); all new claimants, excluding not started SE work (5,044).

The majority of existing claimants have at least a fair amount of control over their self-employed work.

Currently how much control do you have over the following in your employed work? / When you were most recently self-employed, how much control did you have over the following?

Amount of of hours	The number of hours you work each week	When you do your work each week (e.g. the times of day or days of week	The way you work (e.g. how you can complete tasks or the order you complete them in)
A great deal	34%	37%	44%
A fair amount	27%	28%	28%
A little	22%	20%	16%
None at all	12%	10%	7%
Don’t know	5%	6%	6%

Base: All existing claimants, excluding not started SE work (5,138). Totals may not sum due to rounding.

Subgroups of existing claimants most likely to have different levels of control over their work.

High control (n=1,231):

• Directors (32%) and freelancers (22%)
• SE under 12 months or 1-2 years (both 26%)
• Animals / agriculture (39%) retail / sales (38%)
• Female (27%)

Some control (n=3,634):

• Those working for another business (86%) and subcontractors (82%)
• Transport / distribution / delivery (82%), social care / healthcare / education / childcare (75%), domestic / vehicle services / utilities (73%)
• SE 2-4 years (77%) and 5+ years (73%)

No control (n=165):

• Subcontractors (6%)

Three statements: 1. The number of hours you work each week. 2. When you undertake your work each week (i.e. the times of day or days of the week). 3. The way you work (e.g. how you can complete tasks or the order you complete them in). High control (“a great deal” to all three statements); No control (“none at all” to all three statements); Some control (different responses across the three statements).

Base: All existing claimants, excluding not started SE work (5,138).

The majority of new claimants have at least a fair amount of control over their self-employed work.

Currently, how much control do you have over the following in your self-employed work? / When you were most recently self-employed, how much control did you have over the following?

Amount of of hours	The number of hours you work each week	When you do your work each week (e.g. the times of day or days of week	The way you work (e.g. how you can complete tasks or the order you complete them in)
A great deal	31%	33%	42%
A fair amount	28%	29%	29%
A little	22%	20%	16%
None at all	15%	13%	9%
Don’t know	3%	4%	4%

Base: All new claimants, excluding not started SE work (5,044). Totals may not sum due to rounding.

Subgroups of new claimants most likely to have different levels of control over their work.

High Control (n=1,129):

• Directors (30%)
• SE 5+ years (23%)
• Retail / sales (31%), professional services (30%), personal services / beauty / sport & fitness (30%)
• Female (26%)

Some control (n=3,610):

• Those working for another business (81%) and subcontractors (80%)
• London (78%)
• Transport / distribution / delivery (77%), media / telecoms / arts (76%), manufacturing / construction / engineering (75%), domestic / vehicle services / utilities (75%)

No control (n=244):

• Media / telecoms / arts (8%)
• Subcontractors (8%)

Three statements: 1. The number of hours you work each week. 2. When you undertake your work each week (i.e. the times of day or days of the week). 3. The way you work (e.g. how you can complete tasks or the order you complete them in). High control (”a great deal” to all three statements). No control (“none at all” to all three statements). Some control (different responses across the three statements).

Base: All new claimants, excluding not started SE work (5,044).

Existing claimants are mainly passionate and confident about their self-employed work.

How you feel about self-employment	Strongly agree	Tend to agree	Neither agree or disagree	Tend to disagree	Strongly disagree	Don’t know
My self-employment activity is something I’m passionate about	64%	20%	9%	–	–	4%
I’m confident in my ability to make a success of my self-employment	54%	28%	10%	3%	1%	4%
I feel confident dealing with finances in general	31%	34%	16%	9%	5%	5%
If I had the opportunity, I would rather work for an employer than be self-employed	11%	9%	17%	16%	41%	6%

• 84% of existing claimants agreed with the statement ‘My self-employment activity is something I’m passionate about’.
• 82% of existing claimants agreed with the statement ‘I’m confident in my ability to make a success of my self-employment’.
• 65% of existing claimants agreed with the statement ‘I feel confident dealing with finances in general’.
• 58% of existing claimants disagreed with the statement ‘If I had the opportunity, I would rather work for an employer than be self-employed’.

Percentages shown if 3% or more. Totals may not sum due to rounding

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

More than half of existing claimants are not comfortable with their financial situation at the moment.

• 63% of existing claimants agreed with the statement ‘I’m willing to completely rethink my business plan if that helps to increase my earnings from self-employment’.
• 41% of existing claimants agreed with the statement ‘Even if I wanted to do something different, I feel unable to change my current self-employment’.
• 34% of existing claimants agreed with the statement ‘I have wider life goals that are more important than my self-employment activity at the moment’.
• 56% of existing claimants disagreed with the statement ‘I’m comfortable with my financial statement at the moment’.

Percentages shown if 3% or more. Totals may not sum due to rounding

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

New claimants are also passionate and confident about their self-employed work.

• 83% of new claimants agreed with the statement ‘My self-employment activity is something I’m passionate about’.
• 82% of new claimants agreed with the statement ‘I’m confident in my ability to make a success of my self-employment’.
• 66% of new claimants agreed with the statement ‘I feel confident dealing with finances in general’.
• 57% of new claimants disagreed with the statement ‘If I had the opportunity, I would rather work for an employer than be self-employed’.

Percentages shown if 3% or more. Totals may not sum due to rounding

Base: New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

More than half of new claimants are not comfortable with their financial situation at the moment.

• 58% of new claimants agreed with the statement ‘I’m willing to completely rethink my business plan if that helps to increase my earnings from self-employment’.
• 46% of new claimants agreed with the statement ‘Even if I wanted to do something different, I feel unable to change my current self-employment’.
• 34% of new claimants agreed with the statement ‘I have wider life goals that are more important than my self-employment activity at the moment’.
• 55% of new claimants disagreed with the statement ‘I’m comfortable with my financial situation at the moment’.

Percentages shown if 3% or more. Totals may not sum due to rounding

Base: New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

4. Profits from self-employed work

In August, nearly a third of existing claimants made a loss or no profit pre-tax for their self-employed work.

Amount of loss/profit	Typical mnthly pre-tax profit before lockdown	Monthly pre-tax profit in August 2020
Made a loss	8%	18%
£0	7%	14%
£1 to £249	11%	11%
£250 to £499	12%	10%
£500 to £749	10%	6%
£750 to £999	10%	5%
£1,000 to £1,249	7%	3%
£1,250 to £1,499	7%	2%
£1,500 to £1,749	3%	1%
£1,750 to £1,999	3%	1%
£2,000+	6%	3%
Don’t know	14%	20%

• 15% of existing claimants made a loss or no profit before lockdown compared to 32% in August 2020.
• 43% of existing claimants made a profit of between £1 and £999 before lockdown compared to 32% in August 2020.
• 26% of existing claimants made a typical monthly pre-tax profit of £1,000 or more pre-lockdown, but only 10% did so in August 2020.

Base: All existing claimants, excluding not started SE work (5,138); ‘Prefer not to say’ and ‘not self-employed before March / in August’ codes not shown.

Sectors for existing claimants most likely to have made a loss or no profit pre-tax for their self-employed work in August 2020.

Sectors	Pre-tax loss/no profit before March	Pre-tax loss/no profit in August
Media/telecoms arts	21%	49%
Retail/sales	22%	43%
Food/drink/hospitality/leisure	25%	42%
Professional services	24%	41%

Base: All existing claimants, excluding not started SE work (5,138).

Half of existing claimants who typically made a profit before lockdown say their profits varied by more than £100 from month to month.

Before the UK went into lockdown in March, how much did your profits from self-employment vary month to month?

How much profit varied	Percentage
Hardly at all	15%
Usually within £100	16%
Usually by £100 to under £250	21%
Usually by £250 to under £500	15%
Usually by £500 or more	14%
Don’t know	16%
Prefer not to say	3%

• 50% of existing claimants’ profits varied by £100+

For those who say their profits vary, reasons include:

• Number of customers or clients / sales (46%)
• Number of hours worked (28%)
• Seasonal changes in demand (27%)
• Demand has slowed over time (17%)
• Investing money back into the business (11%)

Greatest variation by £250 per month in:

• Media, Telecom, Arts – 35%
• Professional Services – 34%
• Transport/distribution/delivery – 33%

Base: All existing claimants who were self-employed before March and typically made a monthly profit before lockdown (4,179); existing claimants who say their profits varied from month to month before lockdown (2,776).

Pre-tax profit among new claimants dropped significantly between before lockdown and August.

Amount of loss/profit	Typical mnthly pre-tax profit before lockdown	Monthly pre-tax profit in August 2020
Made a loss	3%	14%
£0	3%	16%
£1 to £249	3%	8%
£250 to £499	6%	8%
£500 to £749	7%	5%
£750 to £999	8%	4%
£1,000 to £1,249	9%	3%
£1,250 to £1,499	7%	2%
£1,500 to £1,749	7%	2%
£1,750 to £1,999	6%	2%
£2,000+	20%	7%
Don’t know	16%	22%

• 6% of new claimants made a loss or no profit before lockdown compared to 30% in August 2020.
• 24% of new claimants made a typical monthly pre-tax profit of between £1 and £999, and 25% in August 2020.
• 49% of new claimants made a typical monthly pre-tax profit of £1,000 or more pre-lockdown, but only 16% did so in August 2020.

Base: All new claimants, excluding those who haven’t started SE work (5,044). ‘Prefer not to say’ and ‘not self-employed before March / in August’ codes not shown.

Sectors for new claimants most likely to have made a loss or no profit pre-tax for their self-employed work in August.

Sectors	Pre-tax/no profit before March	Pre-tax loss/no profit in August
Media/telecoms/arts	6%	45%
Retail/sales	13%	39%
Food/drink/hospitality/leisure	11%	39%
Professional services	8%	35%

Base: All new claimants, excluding those who haven’t started SE work (5,044).

Nearly three in five new claimants who typically made a profit before lockdown say their profits varied by more than £100 from month to month.

Before the UK went into lockdown in March, how much did your profits from self-employment vary from month to month?

How much profit varied	Percentage
Hardly at all	12%
Usually within £100	9%
Usually by £100 to under £250	19%
Usually by £250 to under £500	19%
Usually by £500 or more	20%
Don’t know	17%
Prefer not to say	3%

• 58% of new claimants’ profits vary by £100+.

For those who say their profits vary, reasons include:

• Number of customers or clients / sales (45%)
• Seasonal changes in demand (34%)
• Number of hours worked (34%)
• Demand has slowed over time (14%)
• Late payment by customers (9%)

Greatest variation by £250 per month in the following industries:

• Media, Telecom, Arts – 57%
• Professional Services – 49%
• Food, Hospitality and Drink – 46%

Base: All new claimants who were self-employed before March and typically made a monthly profit before lockdown (5,672); new claimants who say their profits varied from month to month before lockdown (3,156).

5. Plans for the future

Most existing claimants plan to stay self-employed in 6 months’ time, and aim to increase their customer base, marketing, and hours.

In 6 months’ time:

• 84% plan to still be doing the same self-employed work
• 7% plan to be self-employed but in a different line of work

Which of the following, if any, are you planning to do over the next 6 months? Top 6 mentions

Plan for next 6 months	Percentage
Increase your customer base	72%
Carry out marketing	63%
Increase the typical hours you work	52%
Invest in new equipment or systems	50%
Offer new or different products or services	50%
Undertake training or courses	45%

Base: All existing claimants (5,159); Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

New claimants have similar plans for the next 6 months.

In 6 months’ time:

• 86% plan to still be doing the same self-employed work
• 6% plan to be self-employed but in different line of work

Which of the following, if any, are you planning to do over the next 6 months? Top 6 mentions

Plan for next 6 months	Percentage
Increase your customer base	64%
Carry out marketing	51%
Increase the typical hours you work	47%
Invest in new equipment or systems	45%
Undertake training or courses	42%
Offer new or different products or services	39%

Base: All new claimants (5,062); New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Just over two fifths of existing claimants expect growth in profits, but more than a quarter are uncertain.

Compared to your current situation, what do you expect to happen to your typical monthly profit from self-employment in 6 months from now – that is, around February 2021?

Expected monthly profit	Percentage
Grow	42%
Stay the same	15%
Decline	15%
Don’t know	28%

Some groups are more likely to expect growth:

• Those working in media / telecoms / arts (53%)
• Those working in professional services (49%)
• Those with high control over work (52%)
• Those who made a loss / no profit just before lockdown (60%)
• Directors (48%)
• Freelancers (42%)
• Those new to self-employed work: 52% of those that have been self-employed for under 1 year and 47% of those self-employed for 1-2 years compared to 34% of those self-employed for 2-5 years and 30% among those self-employed for 5 years or more.

Base: Existing claimants who expect to be self-employed in 6 months or don’t know (4,903).

Nearly a quarter of new claimants expect profits to decline in 6 months’ time, and nearly a third don’t know.

Compared to your current situation, what do you expect to happen to your typical monthly profit from self-employment in 6 months from now – that is, around February 2021?

Expected monthly profit	Percentage
Grow	29%
Stay the same	17%
Decline	24%
Don’t know	30%

Similar subgroups of new claimants are most likely to expect growth as for existing claimants:

• Directors and freelancers
• Those new to self-employment (less than 2 years)
• Those with high control over their work
• Those who made a loss / no profit just before lockdown
• Those working in professional services, and those working in social care / healthcare / education / childcare

Those most likely to expect decline in profits include:

• Those working in food / drink / hospitality (41%)
• Self-employed in Scotland (34%)
• Self-employed in Wales (32%)

Base: New claimants who expect to be self-employed in 6 months or don’t know (4,824).

For the small number of claimants planning to leave self-employment, COVID-19 and affordability are the most common reasons behind this decision.

4% of both existing and new claimants plan to work for an employer in 6 months’ time. (Base: All existing claimants (5,159), all new claimants (5,062).)

What are your reasons for aiming to leave self-employment within the next 6 months?

Reason to leave self-employment	Existing customers	New customers
COVID-19	54%	59%
Income/affordability	51%	52%
Market conditions	30%	29%
Personal circumstances	28%	15%

Base: All existing claimants who expect to be working for an employer as their main activity in 6 months, or not in paid work, nor retired in 6 months (230); All new claimants who expect to be working for an employer as their main activity in 6 months, or not in paid work, nor retired in 6 months (208).

6. Support needs

Existing claimants see external factors as key barriers to making the most of their work.

To what extent, if at all, are each of the following stopping you from making the most of your self-employed work?

Problems being self-employed	Percentage
Lack of demand	39%
Competition from others	34%
Difficulty getting business loans or investment	31%
Not being able to raise prices	28%
Personal health issues	21%
Not having suitable premises or location	19%
Difficulty finding childcare	19%
Lack of support or mentoring	18%
Lack of digital skills	16%
Other caring responsibilities	15%
Lack of business skills	12%
Lack of local transport links	8%

Percentages show participant responses where the following stopped them from making the most of their self-employed work either “a great deal” or “a fair amount”.

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

Existing claimant subgroups most likely to report key barriers.

Lack of demand is most likely to affect:

• Freelancers (42%)
• Professional services (45%) and transport / distribution / delivery (44%)

Competition from others is most likely to affect:

• Professional services (42%)

Difficulty getting business loans or investment is most likely to affect:

• Directors / business owners (37%)
• Those new to self-employment (35% under 12 months; 35% 12 months to less than 2 years)
• Food / drink / hospitality / leisure (41%) and retail / sales (39%)

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

New claimants face similar barriers to making the most of their work.

To what extent, if at all, are each of the following stopping you from making the most of your self-employed work?

Problems being self-employed	Percentage
Lack of demand	45%
Competition from others	33%
Difficulty getting business loans or investment	29%
Not being able to raise prices	21%
Personal health issues	14%
Lack of support or mentoring	14%
Not having suitable premises or location	13%
Lack of digital skills	11%
Lack of business skills	10%
Difficulty finding childcare	9%
Other caring responsibilities	9%
Lack of local transport links	7%

Percentages show participant responses where the following stopped them from making the most of their self-employed work either “a great deal” or “a fair amount”.

New claimants who expect their profits to decline in 6 months’ time are more likely to mention the following key barriers:

• lack of demand (56%)
• competition from others (38%)
• not being able to raise prices (33%)

Base: New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Both existing and new claimants would find it helpful to receive guidance on doing tax returns and reporting expenses.

In which of the following areas, if any, would you find it helpful to receive advice and guidance for your self-employed work? Top 6 mentions

Type of helpful advice/guidance	Existing customers	New customers
Doing tax returns and reporting expenses to DWP or HMRC	45%	38%
Getting business loans or investment	41%	33%
How to move or promote your buiness online	40%	34%
How to comply with regulations	35%	33%
How to do your work safely during COVID-19 pandemic	35%	36%
Budget and financial management	35%	32%

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670); New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Existing claimant subgroups most likely to want support.

45% – Doing tax returns and reporting expenses to DWP or HMRC.

• those who have been self-employed less than 12 months (55%) and 1-2 years (52%)

41% – Getting business loans or investment

• Director / business owner (48%)
• Under 12 months and 1-2 years (both 46%)
• Plan to move to a different line of SE work (54%)
• Made a loss in August (56%) and before lockdown (58%)

40% – How to move or promote your business online

• Director / business owner (49%)
• Under 12 months and 1-2 years (46%, 44%)
• Plan to move to a different line of SE work (50%)
• Made a loss in August (52%) and before lockdown (58%)
• Personal services / beauty / sport and fitness (55%)

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

New claimant subgroups most likely want to support.

• 38% - Doing tax returns and reporting expenses to DWP or HMRC.
  • those who work for another business (46%)
  • those who have been SE less than 12 months (56%) and 1-2 years (51%)
  • those who expect their business to grow (42%)
  • those in London (45%)
• 36% - How to work safely during the COVID-19 pandemic.
  • those who work for another business (46%)
  • those who expect their business to decline (42%)
  • food / drink / hospitality / leisure (45%), transport / distribution / delivery (44%), personal services / beauty / sport & fitness (44%), social care / healthcare / education / childcare (43%), media / telecoms / arts (42%)
• 34% - How to move or promote your business online.
  • Directors (41%) and freelancers (39%)
  • those who have been SE less than 12 months (43%)
  • those in London (39%)

Base: New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Existing claimants are more likely to go to friends, family, or self-employed peers for advice than to professional sources.

In the last 12 months, have you had any advice, guidance or support from any of the following to help you achieve your self-employment goals?

Source of help	Percentage
Any friends or family members	40%
Any peers who are self-employed or do the same line of work	38%
An accountant, bank manager or another finance professional	18%
Voluntary orgs (eg Citizens Advice)	6%
Other govt agencies	14%
Other private sector orgs	7%
None of the above	28%
Don’t know	4%

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670).

New claimants are more likely to go to friends, family or self-employed peers for advice than to professional sources.

In the last 12 months, have you had any advice, guidance or support from any of the following to help you achieve your self-employment goals?

Source of help	Percentage
Any peers who are self-employed or do the same line of work	44%
Any friends or family members	40%
An accountant, bank manager or another finance professional	22%
Other govt agencies	7%
Voluntary orgs (eg Citizens Advice)	3%
Other private sector orgs	5%
None of the above	30%
Don’t know	3%

Base: New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Most existing and new claimants agree that they know where to go for advice and guidance, but notable minority disagree.

‘I know where I can go for advice and guidance to help me achieve my self-employment goals.’

Level of Agreement/disagreement	Existing claimants	New claimants
Strongly agree	25%	22%
Tend to agree	29%	29%
Neither agree nor disagree	18%	20%
Tend to disagree	12%	14%
Strongly disagree	8%	8%
Don’t know	7%	7%

• Of existing claimants, 21% disagree in some way (strongly disagree / tend to disagree) and 54% agree in some way (strongly agree / tend to agree) with the statement.
• Of new claimants, 22% disagree in some way (strongly disagree / tend to disagree) and 51% agree in some way with the statement (strongly agree / tend to agree).

For both groups, those who expect their profits to decline 6 months from now were more likely to say they don’t know where to go for advice and guidance.

Base: Existing claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,670); New claimants who are currently doing self-employed work, excluding those who haven’t started SE work (4,235).

Both existing and new claimants who do not know where to go for advice and guidance would most welcome support in doing tax returns and moving business online.

Type of helpful advice/guidance	Existing customers	New customers
How to move or promote your buiness online	58%	54%
Doing tax returns and reporting expenses to DWP or HMRC	57%	54%
Getting business loans or investment	57%	49%
Budget and financial management	51%	52%
Finding relevant training courses	47%	47%
How to do market research	47%	–
How to comply with regulations	–	46%

Base: Existing claimants who are currently doing self-employed work and don’t know where to get advice (963); New claimants who are currently doing self-employed work and don’t know where to get advice (891).

7. Segmentation profiling – attitudes to self-employed work

Segment overview – Existing claimants

22% – Passionate, knowledgeable and successful

• Passionate about their self-employment activity and want to be self-employed
• Confident dealing with finances
• Knowledgeable about sources of advice & guidance
• Most likely to expect profits to grow
• Most likely to be business owner/director
• Have highest level of control over hours work

20% – Passionate, knowledgeable and struggling

• Passionate about their self-employment activity and want to be self employed
• Not comfortable with their financial situation at the moment, but expect future profits to grow
• Knowledgeable about sources of advice & guidance
• More likely to feel unable to change their situation
• Negatively impacted by COVID-19

19% – Passionate but struggling

• Passionate about their self-employment activity and want to be self employed
• Not comfortable with their financial situation at the moment
• Lacking financial confidence
• Lacking awareness of advice & guidance
• Most negatively impacted by COVID-19, but expect future profits to grow
• Personal health issues stopping them making the most of SE activity

16% – Content with other priorities

• Less ambitious – more likely to expect profits to remain the same
• Confident dealing with finances and comfortable with their financial situation at the moment
• Least impacted financially by COVID-19
• Prioritising life goals
• More likely to have a family

23% – Discontented

• Lack confidence and passion in SE activity
• More likely to prefer to be employed by employer
• More likely to expect profits to decline or uncertainty of future profits
• More likely to work varying shift patterns for another business
• Have least control over hours worked

Passionate, knowledgeable & successful – Existing claimants

Likely to be younger, with families. Been in self-employment less than 2 years. Over a third have a lot of control over their work. Aiming to invest in increasing customer base and marketing.

Family and Home

• 41% female; 59% male
• 44% couples
• 66% children in household
• 71% under 45; 29% 45 and over
• 40% constantly struggle with bills or fall behind

Work

• 41% work 31+ hours a week
• 64% have been in SE for less than 2 years
• 14% work in professional services
• 35% have a lot of control over their work

Future Goals

Future goals	Percentage
Increase your customer base	84%
Carry out marketing to promote your SE work	76%
Invest in new equipment or systems	61%
Offer new or different products or services	58%
Increase the typical hours you work	52%
Undertake training courses relevant to youe SE work	52%
Update an existing business plan for your SE work	43%
Reduce costs	34%
Write a business plan for your SE work	26%
Looking for an additional job or jobs	23%

Base: 1,046

Passionate, knowledgeable & struggling – Existing claimants

Just over a third over 45, with families. Greater variation in hours worked and less control. Struggling financially. Aiming to invest in increasing customer base and marketing.

Family and Home

• 41% female; 59% male
• 45% couples
• 69% children in household
• 65% under 45; 35% 45 and over
• 57% constantly struggle with bills or fall behind

Work

• 36% work 31+ hours a week; 18% say it varies too much each week to say
• 53% have been in SE for less than 2 years
• 12% work in professional services / 9% In arts or entertainment
• 25% have a lot of control over their work
• 47% impacted by lack of demand, 36% struggling to get loans, 32% not being able to increase prices

Future Goals

Future goals	Percentage
Increase your customer base	81%
Carry out marketing to promote your SE work	73%
Offer new or different products or services	56%
Increase the typical hours you work	56%
Invest in new equipment or systems	50%
Undertake training courses relevant to youe SE work	44%
Update an existing business plan for your SE work	41%
Looking for an additional job or jobs	34%
Reduce costs	32%
Write a business plan for your SE work	27%

Base: 935

Passionate and struggling – Existing claimants

Likely to be younger, with families. Been in self-employment less than 2 years Greater variation in hours worked. Struggling financially. Aiming to invest in increasing customer base.

Family and Home

• 44% female; 56% male
• 41% couples
• 63% children in household
• 70% under 45; 30% 45 and over
• 70% constantly struggle with bills or fall behind
• 25% personal health issues are a barrier

Work

• 33% work 31+ hours a week; 18% say it varies too much each week to say
• 62% have been in SE for less than 2 years
• 13% work in professional services; 10% in arts or entertainment; 9% hairdressing or beautician
• 22% have a lot of control over their work
• 45% struggling to get loans
• 44% impacted by lack of demand; 40% of competition; 34% not being able to increase prices

Future Goals

Future goals	Percentage
Increase your customer base	83%
Carry out marketing to promote your SE work	74%
Offer new or different products or services	62%
Invest in new equipment or systems	57%
Increase the typical hours you work	54%
Undertake training courses relevant to youe SE work	51%
Update an existing business plan for your SE work	39%
Looking for an additional job or jobs	37%
Reduce costs	31%
Write a business plan for your SE work	29%

Base: 870

Content with other priorities – Existing claimants

More likely to be younger males with families. Greater spread in length of time in SE work. A fifth have control over their work. Key aim is to increase customer base in the future.

Family and home

• 29% female; 71% male
• 58% couples
• 77% children in household
• 73% under 45; 27% 45 and over
• 29% constantly struggle with bills

Work

• 38% work 31+ hours a week
• 49% have been in SE for more than 2 years
• 12% construction workers and builders; 11% taxi driving or private hire; 11% professional services
• 21% have a lot of control over their work

Future Goals

Future goals	Percentage
Increase your customer base	68%
Carry out marketing to promote your SE work	52%
Increase the typical hours you work	50%
Invest in new equipment or systems	49%
Offer new or different products or services	42%
Undertake training courses relevant to youe SE work	42%
Update an existing business plan for your SE work	34%
Reduce costs	34%
Looking for an additional job or jobs	34%
Write a business plan for your SE work	28%

Base: 762

Discontented – Existing claimants

Likely to be younger males with families. Greater spread in length of time in SE work, but have limited control over their work. Struggling financially. Looking for additional work.

Family and home

• 30% female; 70% male
• 56% couples
• 72% children in household
• 70% under 45; 30% 45 and over
• 57% constantly struggle with bills or fall behind

Work

• 32% work 31+ hours a week; 15% say it varies too much each week to say
• 51% have been in SE for less than 2 years
• 18% taxi driving or private hire; 12% delivery services; 11% construction workers and builders; 10% cleaning and domestic services
• 11% have a lot of control over their work

Future Goals

Future goals	Percentage
Looking for an additional job or jobs	55%
Increase your customer base	51%
Increase the typical hours you work	48%
Carry out marketing to promote your SE work	40%
Undertake training courses relevant to youe SE work	38%
Invest in new equipment or systems	33%
Offer new or different products or services	33%
Update an existing business plan for your SE work	28%
Reduce costs	25%
Write a business plan for your SE work	23%

Base: 1,057

Expected profits reflect how content existing claimants are in their self-employed work.

Compared to your current situation, what do you expect to happen to your typical monthly profit from self-employment in 6 months from now - that is, around February 2021? (% grow)

What you expect 6 months from now	% grow
Passionate, knowledgeable and successful	54%
Passionate, knowledgeable and struggling	46%
Passionate and struggling	45%
Content with other priorities	39%
Disconnected	28%

Top three support needs by cluster for existing claimants

Passionate, knowledgeable and successful

• 41% doing tax returns and reporting to expenses to DWP or HMRC
• 40% getting business loans or investment
• 37% how to move or promote your business online

Passionate, knowledgeable and struggling

• 42% getting business loans or investment
• 40% how to move or promote your business online
• 38% doing tax returns and reporting expenses to DWP or HMRC

Passionate and struggling

• 62% how to move or promote your business online
• 59% doing tax returns and reporting expenses to DWP or HMRC
• 58% getting business loans or investment

Content with other priorities

• 42% doing tax returns and reporting expenses to DWP or HMRC
• 40% how to do your work safely during the COVID-19 pandemic
• 36% how to comply with regulations

Discontented

• 46% doing tax returns and reporting expenses to DWP or HMRC
• 40% how to do your work safely during the COVID-19 pandemic
• 35% how to more or promote your business online
• 35% budgeting and financial management

Segment Overview – New Claimants

• 23% - Passionate and successful
  • Passionate about their self-employment activity and want to be self employed
  • Confident dealing with finances and comfortable with their financial situation
  • Knowledgeable about sources of advice & guidance
  • Have highest level of control over work
  • Most likely to expect profits to grow – although negatively impacted by COVID-19
• 26% - Passionate and struggling
  • Passionate about their self-employment activity and want to be self employed
  • Not financially comfortable & lacking confidence in dealing with finances
  • Lacking awareness of advice & guidance
  • Most negatively impacted by COVID-19 - but expect profits to grow
  • Most likely to be business owner/director
• 17% - Content with other priorities
  • Passionate about their self-employment activity
  • Financially comfortable and confident dealing with finances
  • Knowledgeable about sources of advice & guidance
  • Prioritising life goals
  • Even if wanted to, feel unable to change
  • More likely to have been SE 5+ years
  • Most likely to be chief income earner
• 17% - Dispassionate with other priorities
  • Less passionate about their self-employment activity
  • Prioritising life goals
  • More likely to prefer to be employed by employer
  • High level of uncertainty of future profits
  • Most likely to be/have been SE 2 years or less
  • More likely to be contractor/contract worker
• 17% - Dispassionate and stuck
  • More likely to prefer to be employed by employer
  • Lack confidence in self-employment activity
  • Lacking confidence dealing with finances
  • More likely to expect profits to decline or uncertain of profit
  • Even if wanted to, feel unable to change
  • Personal health issues stopping them making the most of SE activity

Passionate and successful – New claimants

Likely to be younger. Been in self-employment for 5+ years. Just under a third have a lot of control over their work. Aiming to increase customer base and promote their work.

Family and home

• 36% female; 64% male
• 51% couples
• 37% children in household
• 69% under 45; 31% 45 and over
• 33% constantly struggle with bills or fall behind

Work

• 41% work 31+ hours a week
• 49% have been in SE for 5+ years
• 13% arts or entertainment
• 31% have a lot of control over their work

Future Goals

Future goals	Percentage
Increase your customer base	75%
Carry out marketing to promote your SE work	60%
Invest in new equipment or systems	56%
Increase the typical hours you work	48%
Undertake training courses relevant to youe SE work	46%
Offer new or different products or services	44%
Update an existing business plan for your SE work	33%
Reduce costs	32%
Write a business plan for your SE work	25%
Looking for an additional job or jobs	21%

Base: 983

Passionate and struggling – New claimants

Likely to be younger. Been in self-employment for 5+ years. Struggling financially. Aiming to increase customer base and promote self-employment work in the future.

Family and Home

• 37% female; 63% male
• 47% couples
• 33% children in household
• 63% under 45; 37% 45 and over
• 67% constantly struggle with bills or fall behind

Work

• 32% work 31+ hours a week
• 49% have been in SE for 5+ years
• 16% arts or entertainment; 11% professional services
• 19% have a lot of control over their work
• 53% impacted by lack of demand; 39% by competition; 35% not being able to increase prices; 29% struggling to get loans

Future Goals

Future goals	Percentage
Increase your customer base	74%
Carry out marketing to promote your SE work	64%
Increase the typical hours you work	51%
Offer new or different products or services	48%
Invest in new equipment or systems	47%
Undertake training courses relevant to youe SE work	45%
Looking for an additional job or jobs other than your main SE work	21%
Reduce costs	31%
Update an existing business plan for your SE work	29%
Write a business plan for your SE work	25%

Base: 1,094

Content with other priorities – New claimants

Likely to be older. Been in self-employment for 5+ years. Nearly a quarter have control over their work. Aiming to increase customer base and promote self-employment work in the future.

Family and home

• 25% female; 75% male
• 53% couples
• 39% children in household
• 60% under 45; 40% 45 and over
• 28% constantly struggle with bills

Work

• 45% work 31+ hours a week
• 53% have been in SE for 5+ years
• 17% construction workers and builders; 14% other skilled traded (e.g. carpenters, decorators)
• 23% have a lot of control over their work

Future Goals

Future goals	Percentage
Increase your customer base	63%
Carry out marketing to promote your SE work	48%
Invest in new equipment or systems	47%
Increase the typical hours you work	43%
Undertake training courses relevant to youe SE work	37%
Offer new or different products or services	36%
Reduce costs	32%
Looking for an additional job or jobs other than your main SE work	27%
Update an existing business plan for your SE work	27%
Write a business plan for your SE work	19%

Base: 727

Dispassionate with other priorities – New claimants

Likely to be younger, with families. Less control over their work and newer to self-employment. Aiming to increase customer base and look for an additional job.

Family and Home

• 26% female; 74% male
• 49% couples
• 39% children in household
• 69% under 45; 31% 45 and over
• 34% constantly struggle with bills

Work

• 47% work 31+ hours a week
• 34% have been in SE for less than 2 years
• 21% construction workers or builders
• 13% have a lot of control over their work

Future Goals

Future goals	Percentage
Increase your customer base	45%
Look for an additional job or jobs	44%
Increase the typical hours you work	42%
Undertake training courses relevant to youe SE work	39%
Carry out marketing to promote your SE work	34%
Invest in new equipment or systems	33%
Offer new or different products or services	27%
Reduce costs	24%
Update an existing business plan for your SE work	21%
Write a business plan for your SE work	19%

Base: 696

Dispassionate and stuck – New claimants

Likely to be younger, with families. Been in self-employment for 5+ years but have limited control over their work. Struggling financially. Looking for additional work and increasing customer base.

Family and home

• 27% female; 73% male
• 54% couples
• 41% children in household
• 64% under 45; 36% 45 and over
• 62% constantly struggle with bills
• 20% personal health issues

Work

• 39% work 31+ hours a week
• 42% have been in SE for 5+ years
• 16% construction workers and builders; 15% taxi driving or private hire
• 11% have a lot of control over their work
• 52% impacted by lack of demand, 38% by competition, 35% not being able to increase prices and 26% struggling to get loans

Future Goals

Future goals	Percentage
Look for an additional job or jobs	57%
Increase your customer base	52%
Increase the typical hours you work on yiur SE work	48%
Carry out marketing to promote your SE work	43%
Undertake training courses relevant to youe SE work	42%
Invest in new equipment or systems	36%
Offer new or different products or services	34%
Reduce costs	28%
Write a business plan for your SE work	21%
Update an existing business plan for your SE work	21%

Base: 735

Less variation in expected future profits seen amongst new claimants.

Compared to your current situation, what do you expect to happen to your typical monthly profit from self-employment in 6 months from now – that is, around February 2021? (% grow)

What you expect 6 months from now	% grow
Passionate and successful	37%
Passionate and struggling	32%
Content with other priorities	27%
Dispassionate with other priorities	24%
Dispassionate and stuck	21%

Top three support needs by cluster for new claimants.

Passionate and Successful

• 30% doing tax returns and reporting expenses to DWP or HMRC
• 30% how to do your work safely during the COVID-19 pandemic
• 30% how to move or promote your business online

Passionate and Struggling

• 44% how to move or promote your business online
• 43% budgeting and financial management
• 42% getting business loans or investment

Content with other priorities

• 40% how to do your work safely during the COVID-19 pandemic
• 35% doing tax returns and reporting expenses to DWP or HMRC
• 33% how to comply with regulations

Dispassionate with other priorities

• 36% doing tax returns and reporting expenses to DWP or HMRC
• 33% how to do your work safely during the COVID-19 pandemic
• 28% how to comply with regulations
• 28% finding relevant training courses

Dispassionate and stuck

• 48% doing tax returns and reporting expenses to DWP or HMRC
• 41% how to do your work safely during the COVID-19 pandemic
• 39% how to move or promote your business online

8. Conclusions

Conclusions

New UC claimants had typically been in self-employment for 5+ years and personal circumstances were less of a motivator amongst this group.

A third of both existing and new claimants reported earning less or no profit as a result of COVID-19. Claimants who are passionate about SE, but currently struggling, reported that they would like more financial and budgeting advice, along with support to move/promote businesses online.