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Walking away from a traditional job for the freedom of self-employment is a dream many of us share.
Research by NerdWallet in January 2025 found that a fifth (20%) of UK adults have ambitions to become self-employed this year, either instead of their current role or alongside it. A further 10% of adults surveyed have a side hustle business they’ve not yet registered as self-employed.
Since 2011, the number of self-employed workers has gradually increased, as has the turnover of single-person companies. Between November 2024 and January 2025, 4.39 million people in the UK were self-employed. Provided you’re prepared to put in the hard work, there’s no reason why you can’t join them.
Becoming your own boss isn’t just a career decision – it’s a financial one too. If you’re used to a steady income and all the perks of being an employee (such as holiday pay and your pension contributions being automatically deducted), going solo can be daunting.
However, the flexibility that often comes with self-employment can make it easy to juggle family and caring responsibilities. Though it comes with its fair share of stress, running a business of your own can be great for your health and happiness.
This guide aims to offer an insight into what it’s like to be self-employed, so you can start life as a solopreneur with confidence.
Self-employment trends in the UK
After the 2008 financial crisis, self-employment arose as a tempting option for many of those who found themselves without a job. People everywhere realised that creating opportunities themselves was a real alternative to desperately hunting down employment opportunities that no longer existed.
According to the ONS, the number of self-employed people grew from 3.3 million in 2001 to a peak of 5 million at the end of 2019. By March 2022, however, that figure had fallen back to 4.2 million – a decline that coincided with the Covid-19 pandemic.
Since then, Britain’s entrepreneurial spirit has bounced back, with 12% more people considering starting a business or side hustle in 2025 than in 2024, according to Enterprise Nation’s Startup Ambition report.
- Will I be able to afford to have time off?
- What happens if I am sick and can’t work for a period?
- Can I afford to balance self-employment with childcare and other family responsibilites?
- How will I save for retirement without employer pension contributions?
- Can I do without employee benefits like private health care and life insurance?
- Can I motivate myself to work hard without a boss?
- Who can support me on my business journey?
- Where can I find other likeminded small business owners?
Pros and cons of becoming self-employed
For anyone used to having a regular income, paid holiday, sick pay and all the legal benefits of traditional employment, going self-employed can feel risky. While you gain the freedom to choose when and how you work, your financial situation may be less secure. .
Building financial resilience as a freelancer or small business owner is important, but don’t let that stop you from starting. Providing you can cover your essential costs through your earnings, working for yourself can be a much better option than remaining employed. In fact, the freedom and work-life balance benefits of being self-employed might mean you’re less desperate for time off in the first place.
There are many advantages to working for yourself, then, but the main ones can be summarised as follows:
- You’ll have the freedom to work when, how and where you choose.
- You’ll have greater levels of flexibility in your working life.
- There is the potential for great job satisfaction and personal motivation.
- You can abandon the time-consuming and costly commute.
- You can pursue your passion and work with others who share your vision.
When is the best time to go self-employed?
If you wait for the perfect moment to leave your job, it might never come. Like many major life decisions, there’s no ‘right’ time to go self-employed. However, it’s worth thinking about the personal financial and personal goals you want to achieve, such as buying a house or starting a family, and factor those in to your decision to start your own business.
Unemployed
You’ll need to consider your financial stability, as going self-employed for the first time is a leap of faith, and success isn’t guaranteed. However, if you’ve been unemployed for a while and have found job hunting unsuccessful, working for yourself offers an alternative path that might suit you better.
Starting a family
A large number of new parents turn to self-employment to create a better work-life balance when returning to work. Many parents run businesses alongside traditional jobs, turning their skills and hobbies into extra income for their family. Working mums now account for more than a fifth of all side hustles, according to IPSE, the Self Employment Association.
Working for yourself enables you to dictate your own working hours to fit around the nursery or school pick-up and holidays. However, your financial responsibilities become greater when you have dependents, so plan carefully.
Graduated college or university
A growing number of 16- to 24-year-olds now take control of their own future by working as sole traders, in partnerships or by starting their own businesses. The shortage of job opportunities for this demographic is well-publicised and, when armed with a youthful spirit of adventure, many have started to see that it can be empowering to work for yourself.
Thinking of retiring
Statistically, older workers may be more likely to face redundancy or miss out on promotions, leading them to strike out on their own as self employed consultants.
Instead of retiring, those over the age of 65 can continue to make money on their own terms and work for themselves, while enjoying some of the benefits of traditional retirement. This was the case for Peter and Gill White, who run a pottery business from their home.
“For me, it’s been about personal growth and fulfilling long-held aspirations.There are many benefits to running a business at our age, but the flexibility is especially valuable.” said Peter.
» MORE: Rethinking Retirement: Why Becoming Your Own Boss In Your 50s Could Be Your Best Career Move Yet
Self-employment tax
Tax for self-employed workers is one of the more complex aspects to consider. Your self-employment tax obligations will vary depending on whether you are running a limited company or working as a sole trader.
If you are considering the former, you may need an accountant to advise you, as you’ll be responsible for completing your personal tax returns as well as those for your company. This can be a time-consuming part of running a business. However, many self employed business owners take the DIY approach to accounting, using digital accounting software that comes free with some business bank accounts.
» MORE: DIY Accounting? Here’s What you Need to Remember
As part of getting set up, you may need to establish whether you are employed or self-employed. Sounds confusing, you’re self-employed if you work for yourself surely? Well perhaps not when it comes to tax if you’re operating a limited company. Find out more online using the government’s employment status checking service.
If you’re operating as a sole trader on the other hand, as many self-employed freelancers do, you’ll just need to complete an annual self-assessment tax return, which many sole traders manage themselves. To do this you will need to keep detailed records of all the money that comes in and out of the business each month.
Soon, all businesses will be required to file their taxes online, as part of using HMRC’s Making Tax Digital. Find out when the deadlines will apply to you.
Potential taxes you may need to pay as a self-employed person:
- VAT
- Income tax
- National Insurance
- Student loan repayments
- Capital gains tax
The essentials of self-employed life
To run virtually any kind of business, you’ll need a decent computer or laptop, a reliable internet and phone connection and access to a comfortable and appropriate space from which to work. Be mindful that there can be hidden costs of working from home.
Relying on your local café’s wi-fi and your smartphone probably won’t cut it in the long term – so invest in the right basics before you begin.
If you find filling out your tax return challenging, you might want to hire an accountant or tax adviser. Finding someone you trust and are happy to work with early on will give you access to the valuable expertise you’ll need to meet your financial obligations and organise your accounts.
If you can’t work from home, you’ll need to track down and secure the right office or premises. Co-working spaces are an increasingly common option for today’s freelancers and sole traders. These charge a monthly subscription for the ability to share space with other freelancers and entrepreneurs.
» MORE: How to find the best office space
Self-employment essentials at a glance:
- the right premises
- business insurance
- laptop
- internet
- phone
- HMRC approved accounting software
Business insurance is also well worth looking into to protect you against mishaps in the course of business. Some professions will require insurance to be in place – sometimes to a minimum level – before clients will be comfortable working with you. Don’t see this as a luxury – it’s something you need to think through and research carefully.
Lastly, and perhaps most importantly, having prospective clients is an obvious but major advantage before you make the leap to self-employment. You might have contacts from a former job that you can connect with on LinkedIn or through other social media or even with a good old-fashioned phone call. Alternatively, you can start to drum up business with some social media marketing and a simple business website. Networking can also provide an opportunity to do some market research or pick up tips from other business owners.
With a little determination and a great deal of motivation, self-employment can be a great career choice for a huge variety of people in different businesses and trades. Are you ready to make the leap?
Image source: Getty Images
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