We need to talk about training and skills for the self-employed

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Despite the self-employed accounting for 13 per cent of the labour market, public policy often fails to cater for those self-employed individuals looking to upskill or retrain.

Unfortunately, we know that this leaves some trapped in a cycle of low pay whilst also failing to tackle the UK’s low productivity. Is it not time to unlock the potential of this sector and boost the skillset of the UK’s flexible expertise?

The importance of training

Accessing the right talent is essential to businesses and ultimately helps economies grow. Often, this comes in the form of freelance expertise and talent.

With the UK facing a slowing population growth and growing levels of economic inactivity, the role of the self-employed workforce could become even more vital in driving the UK’s economic fortunes. Training this cohort is therefore vital if we are to achieve a high-skill, high-wage economy that we often hear about.

Training can also ensure that the self-employed are equipped to compete with cheaper labour from abroad, providing a knowledge-based edge that makes their offering competitive.

In addition, the self-employed are uniquely placed to embrace new technologies and take these skills to the businesses they work with. For instance, it’s highly likely that self-employed developers and IT specialists will be at the forefront of bringing Artificial Intelligence to the businesses they work with.

We also know that self-employed individuals operating in lower-skilled roles are more likely than employees to have no formal qualifications and therefore less likely to progress to a higher-skilled role. The lack of training opportunities leaves many of these individuals discouraged from upskilling and trapped in a cycle of low pay work.

Making training in new skills tax-deductible

Currently, training is only tax-deductible if it relates to your current business. You cannot claim for training courses that help you start a new business or help you expand into new areas of business.

With politicians continually citing the UK’s low productivity and the rise of Artificial Intelligence potentially threatening many traditional jobs, we should be encouraging rather than discouraging the UK’s workforce to retrain.

If Rishi Sunak is serious about the UK becoming a world-leader on Artificial Intelligence, the UK government must make training in new skills tax-deductible and unlock the potential of the self-employed sector to carry forward new technologies and ultimately improve the UK’s productivity.

Reforming the apprenticeship levy

Since the IR35 reforms were introduced in the private sector in 2021, we know that freelancers are increasingly operating via an umbrella company. Many of these umbrella company workers now report that they are covering Employer’s National Insurance and Apprenticeship Levy deductions, albeit indirectly.  

These umbrella company workers have become de facto employees without the associate benefits and protections.

Increased umbrella work has resulted in umbrellas making even greater apprenticeship levy contributions – but none of this money is ever spent on the contractors on their payrolls.

IPSE wants to see these apprenticeship levy contributions from umbrella companies ringfenced and subsequently used to create a self-employed training fund, or even offset an expansion of tax-deductible training.

Training amongst the self-employed over the last 12 months

Concerningly, our latest research on training uptake amongst the self-employed reveals that over half of freelancers (51%) have not undertaken any professional or work-related training in the last 12 months.

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When we asked why these self-employed individuals undertake professional or work-related training, the majority (76%) reported it was to improve subject knowledge.

A further 62 per cent indicated it was to develop practice skills whilst 41 per cent cited the need to fulfill personal interests and 32 per cent reported it was to obtain professional or industry recognition.

IPSE has presented these ideas on reforming training and boosting skills for the self-employed to a recent Future of Work review led by Matt Warman MP. We have also submitted our plan to retrain and upskill the sector as part of our submission to Labour’s National Policy Forum.

We also want to hear your views on our proposals and your experience of accessing training whilst self-employed - please write to [email protected] to share your feedback and experiences.

Research hub

IPSE is at the forefront of research into freelancing and self-employment. We work with our members, leading academic institutions and research agencies to to shed light on the needs and interests of freelancers so we can champion them in government and across industry.

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Meet the author

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Joshua Toovey

Senior Research and Policy Officer