Self-employed people and small businesses face high debt levels.

There has been a surge of Self-employed people in recent years. Small businesses have been growing in numbers. The government has praised the willingness of the British public to take a chance in the world of the self-employed.  They say it is helping the economy and they would do more to help small businesses succeed.

In the recent budget the Chancellor, Philip Hammond, cut business rates by a third for all retailers in England with a rateable value of £51,000 or less. He claimed this would save up to £8,000 a year for up to 90% of all independent shops, pubs, restaurants and cafés.

However, self-employed workers will see their tax bills increase from 2020 as the government has expanded the off-payroll working rules, known as IR35, to the private sector.

This means contractors such as IT and management consultants, who work through their own company but are in practice employed by a third party, will pay the right tax as employees, despite being self-employed.

Self-employment and small businesses play crucial role in driving forward the economy.

“Self-employment and small business ownership continues to grow. It plays a crucial role in driving forward our economy,” explained Joanna Elson OBE, chief executive of the Money Advice Trust.

“While many of these businesses are able to flourish, a growing number are struggling with high levels of debt, putting both their business and personal finances at risk.

“Many of the people behind these businesses are in need of advice and information at an earlier stage of their journey. There is support out there but the government needs to do more to proactively champion these opportunities. To ensure that these businesses receive the help they need to succeed,” Elson added.

“For those already in difficulty there is some good news with the inclusion of sole traders in the government’s planned Breathing Space scheme. However, too many people with business debts are suffering in silence for too long before seeking advice.”

Charity say ‘tendency to become self-employed’ leaving 1000s of people deeply in debt

The Money Advice Trust said that nearly a quarter of those contacting them last year had debts of more than £30,000.

The Trust, which runs Business Debtline, also said just under half of its clients owed more than £10,000.

Around 15% of the UK workforce is now classified as self-employed, compared to 12% in 2001.

The main reasons given for business failure include: –

Low and irregular income. A third of workers have annual turnover of less than £25,000’ Late payments. Lack of essential business management skills.

People are reluctant to seek help.

The charity’s Business Debtline’s figures reveal that more than 4 in 10 will wait a year or longer before seeking help or advice to try and resolve their debt problems.

Last month the Treasury announced plans to increase the so-called ‘breathing space’ period.  [For] those in debt from six weeks to two months.

The ‘breathing space’ helps those struggling with debts by freezing payments and interest. It also protects them from creditors while they catch up on their finances.

“It is crucial that any self-employed person or small business owner who is struggling to cope seeks advice as soon as possible,” added Elson.

Individual insolvencies have risen over last three years.

Individual insolvencies have risen significantly over the last three years. Although they have fallen over the last quarter, according to the latest figures.

The Money Advice Trust wants to ensure that the new financial guidance body serves self-employed people properly. It has called for more powers for the Small Business Commissioner.

They say ministers must push ahead with the new Single Financial Guidance Body. The aim is to ensure that self-employed people are well served when it comes to debt and financial advice as well as pensions.

It said there should be more powers for the Small Business Commissioner. These should include the right to fine persistent late payers and an expanded remit to cover the public sector must be introduced. Creditors must extend their work on supporting personal customers to vulnerable people with small businesses.

Getting help with debt problems is ‘vital.’

Finding  a good debt advisor is often a relief.  At Ramsey Lomax we have years of experience in helping people.  One thing to remember is that your chat with our advisors is completely confidential, free and without obligation. For many of our clients just getting if off their chests and having a sympathetic ear to talk to can make all the difference. At Ramsey Lomax we understand ‘financial fear’ and we have helped 1000’s of people towards a debt free future.

Ramsey Lomax are fully authorised and regulated by the FCA, the Financial Conduct Authority. So you can rest assured of our professionalism.  We also make things easier than ever before with up to date communication technology.  To make it as simple as possible for you to become debt free.

Taking that first step is not always easy but is a crucial step towards helping you to find financial freedom.

Read more about Ramsey Lomax here

Contact Ramsey Lomax here.