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| Self-employed struggling with debts vastly beyond their earnings | Self-employed struggling with debts vastly beyond their earnings |
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| Self-employed workers are burdened with debt four times greater than those in full- or part-time employment, a leading debt charity has warned. | Self-employed workers are burdened with debt four times greater than those in full- or part-time employment, a leading debt charity has warned. |
| The self-employed are financially worse off every month, have higher mortgage debts and significantly higher levels of other borrowing such as credit card debt, according to the StepChange debt charity (formerly the CCCS). | The self-employed are financially worse off every month, have higher mortgage debts and significantly higher levels of other borrowing such as credit card debt, according to the StepChange debt charity (formerly the CCCS). |
| In a report commissioned by the Centre for Economics and Business Research (CEBR) using StepChange's client database, the charity found self-employed people face average debts of 18.6 times their annual income, compared to 4.1 times annual income for those working full or part time. | In a report commissioned by the Centre for Economics and Business Research (CEBR) using StepChange's client database, the charity found self-employed people face average debts of 18.6 times their annual income, compared to 4.1 times annual income for those working full or part time. |
| Most of the debt related to mortgages, with the average self-employed person crippled by outstanding mortgage debt of £206,500 compared to £54,600 for full- or part-time workers. The self-employed were also found to earn 14% less than their peers. | Most of the debt related to mortgages, with the average self-employed person crippled by outstanding mortgage debt of £206,500 compared to £54,600 for full- or part-time workers. The self-employed were also found to earn 14% less than their peers. |
| The report found that non-mortgage debt stood at an average £42,500 for the self-employed, compared to £24,200 for those in full- or part-time employment. StepChange said the difference in credit card borrowing illustrates "the marked difference in the fortunes of the two groups" – the self-employed have average debt of £16,100 on their cards, compared to £6,894 for those in full- or part-time employment. | The report found that non-mortgage debt stood at an average £42,500 for the self-employed, compared to £24,200 for those in full- or part-time employment. StepChange said the difference in credit card borrowing illustrates "the marked difference in the fortunes of the two groups" – the self-employed have average debt of £16,100 on their cards, compared to £6,894 for those in full- or part-time employment. |
| Delroy Corinaldi, external affairs director at StepChange, said: "The unsecured debt levels of the self-employed indicate that people are taking on significant debts in order to invest in their businesses. However, with lower income levels, servicing these debts is likely to become increasingly problematic and too often the debt burden can become too much to bear." | Delroy Corinaldi, external affairs director at StepChange, said: "The unsecured debt levels of the self-employed indicate that people are taking on significant debts in order to invest in their businesses. However, with lower income levels, servicing these debts is likely to become increasingly problematic and too often the debt burden can become too much to bear." |
| Corinaldi added that the personal finances of the self-employed are often tied very closely to the fortunes of their businesses. "According to the CEBR, the number of insolvencies for 2012 is expected to be higher than at any point since the financial crisis, meaning the financial position of many self-employed people will be extremely perilous, now or in the very near future." | Corinaldi added that the personal finances of the self-employed are often tied very closely to the fortunes of their businesses. "According to the CEBR, the number of insolvencies for 2012 is expected to be higher than at any point since the financial crisis, meaning the financial position of many self-employed people will be extremely perilous, now or in the very near future." |
| Meanwhile, welfare minister Lord Freud this month dealt a blow to the self-employed by claiming new demands could be placed on them from the introduction of the universal tax credit. He pointed out that as it stands the tax credit system allowed people to pursue hobbies, earn nothing and subsidise their income through state support "without any expectation that they will increase their earnings and move towards self-sufficiency. This flies in the face of a principled welfare system". | Meanwhile, welfare minister Lord Freud this month dealt a blow to the self-employed by claiming new demands could be placed on them from the introduction of the universal tax credit. He pointed out that as it stands the tax credit system allowed people to pursue hobbies, earn nothing and subsidise their income through state support "without any expectation that they will increase their earnings and move towards self-sufficiency. This flies in the face of a principled welfare system". |
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