Introduction
Despite the self-employed accounting for 13 per cent of the labour market, public policy provision offers a lack of support to help the self-employed upskill; leaving some trapped in a cycle of low-pay whilst also failing to tackle the UK’s low productivity.
We know from previous IPSE research that cost and time constrains are the greatest barriers to training and upskilling for the self-employed.1
Similarly, previous research from the Institute for Employment Studies has revealed 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.2 We also, however, know that there is no evidence that the self-employed in higher-skilled roles are less likely to have high level skills than employees in the same occupation.3
In order to demonstrate to policymakers of the need to promote and encourage the self-employed to upskill and ultimately drive UK economic growth, we’ve put together a data brief on self-employed training and skills in 2023. Throughout this report we use both qualitative and quantitative data to demonstrate the importance of training whilst highlighting the gap in upskilling opportunities between the self-employed and employee counterparts.
In order to understand whether freelancers undertake training and skills and compare this to employees, we asked freelancers whether they have carried out any professional or work-related training in the last year.
Our survey of freelancers now reveals that almost half of freelancers (48%) have undertaken professional or work-related training in the last 12 months. In comparison, we know that 61 per cent of employers provided training to their employees between 2019 and 2020.4
Concerningly, over half of freelancers (51%) reported that they have not undertaken any professional or work-related training in the last 12 months whilst one per cent were unsure.
Other responses from freelancers focused on the need to balance training with the needs of upcoming contracts and also the value of training to a freelance business.
“There is a "sweet spot" where a new contract has been won, but not yet started, when investing money in training that is pertinent to the new contract is seen as a good investment.”
“The podcast skills I learnt were not core to my business - but were absolutely fundamental to raising my profile and thus acquiring new clients.”
Looking at the average cost of the training across the last 12 months, freelancers reported that they spent £828 on their professional or work-related training over the last 12 months.
When asked about the average number of days taken off to undertake training, freelancers reported that, on average, they take 10 days off to carry out professional or work-related training.
It is evident that the cost of training and upskilling for the self-employed can be a significant cost – in both days away from work and in the upfront fees. This poses a considerable barrier to many of the 51 per cent that reported that they haven’t undertaken any training over the past year and public policy ultimately needs to reflect this.
“Unlike permanent employees we don't get paid when training, so there is the high cost of training and a loss of earnings to consider.”
“I still undertake training to improve my skills and knowledge and to provide further value to clients. I do this whether I am inside or outside IR35. It pains me to take time away from client work to train, as I feel I am paying twice in effect - the training cost and the lack of billable hours. This limits the training I can undertake which, in turn, limits the speed and flexibility I can offer clients through new services. It's very frustrating.”
The top reason amongst freelancers for undertaking professional or work-related training was to improve subject knowledge, with 76 per cent of respondents citing this.
A further three-fifths of freelancers (62%) indicated that they undertook professional training to develop practical skills whilst an additional two-fifths (41%) reported that it was to fulfil personal interests.
Other responses when asked about the reasons for undertaking training included to obtain professional or industry recognition (32%), to justify an increase in their day rate (15%), to satisfy legal or regulatory requirements of their profession (14%), to obtain an academic qualification (12%) and to gain CPD points (12%).
Why did you undertake professional or work-related training?
Other qualitative responses from freelancers included needing to stay competitive against cheaper labour from abroad and the need to stay up to date with business processes.
“Training is essential for the self-employed workforce to compete with cheaper labour from abroad. It gives us a knowledge-based edge that makes our offering competitive.”
“Please don't ignore the elder part of the (contracting) workforce; they often provide a stabilising "grip on the rudder" but also need training to understand up-to-date and specific business dynamics to do so.”
Encouragingly, 44 per cent of freelancers that undertook training carried out this training when in-between work or not working.
Just 19 per cent of freelancers took a break from work mid-contract to undertake training whereas six per cent paused their search for work to undertake training and a further six per cent rejected work to undertake training.
We also heard from freelancers that some currently undertake training in skills not associated with their core business focus whilst many were keen to see training in new skills and knowledge made tax-deductible. In addition, those operating through an umbrella company – and technically employed through the umbrella – wanted to see training provided by their employer.
“I have multiple income streams for different skillsets - there isn't a singular core business focus so any training I undertake may differ with one another but still be related to the different aspects of my business services. Shouldn’t they all be tax-deductible?”
“Any training or skill investment should be tax deductible. The Self-employed took the risk to set their own businesses up and they get hammered from all directions from a UK Government that does not support or understand them.”
“Attendance at technical conferences as informal Continuing Professional Development should also count as tax-deductible training. In scientific fields and particularly for self-employed individuals, it is an important way of increasing knowledge and experience.”
“If the high-skills and high-wage economy is essential to the government’s plan then surely all training should be tax deductible.”
“It's crucial to take part in self-development to stay up to date with emerging programs and platforms - it's a big upfront cost and freelancers would greatly benefit from tax-deductible courses.”
“Training should be tax deductible if it relates to any part of business and if it helps reduce stress and anxiety in one's work/lifestyle. Education should not be taxed, that is backward thinking.”
“Having training for new skills as non-tax deductible seems to disincentivise freelancers from innovating.”
“It would be good to have all training tax deductible as technology is changing all the time and you need training to keep up with the times – you would automatically get this in a permanent role.”
“As an umbrella worker, I am unable to access employer provided training. When I had my own limited company, I would keep up to date with annual training. With training costs incurring VAT and being non-deductible I undertake no training. In my view training should be tax deductible for all PAYE employees.”
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