According to a recent survey, there are 1.7 million “one-man bands” operating in the UK, with over a quarter of them generating an annual turnover in excess of £50,000 and 5 per cent earning more than £150,000.
Research found that the trend for self-employment has risen sharply in recent years, with many analysts saying that this may be due to the increasing difficulty of finding work, especially permanent and full-time jobs. Some also believe that the rise has kept the unemployment figures lower than they otherwise would have been.
In addition, the trend has seen an increase in the number of older people working for themselves, presumably because of the difficulty in finding employment after the age of 50.
However, while applauding the entrepreneurial spirit of these workers, the insurer points out that over 10 per cent of them have no insurance in place for their businesses, as many owner/managers believe, incorrectly, that their home insurance would cover them as they work from home
Meanwhile, the rise in sole trader businesses has not escaped the attention of the authorities. Last year, Chancellor George Osborne promised to crack down on staff employees attempting to set themselves up as companies in an attempt to pay less tax.
HM Revenue & Customs (HMRC) also said earlier this year that it would target the UK’s 400,000 direct sellers, such as Avon door-to-door sales staff, to make sure they were paying the right tax.
HMRC has already brought in more than £100m since 2011 in its campaign against tax evasion as it searches through operations ranging from scrap metal trade to restaurants.
Figures released yesterday (November 4) revealed that £32m was collected in the first six months of the current tax year and some £48m was raised in the 2012/13 tax year, while £24m was collected in 2011/12.