Self-employed individuals in the UK in 2025 are continuing to face a variety of challenges that impact their financial stability, mental health, and business operations. These issues are shaped by economic fluctuations, regulatory changes, and systemic problems within the self-employment sector.
Economic Instability and Financial Pressures
One of the most pressing concerns for many self-employed individuals is the rising cost of running a business. A survey by small business lender Iwoca found that 42% of business owners view mounting operating costs as their main worry for 2025. Furthermore, 40% are concerned about potential tax hikes, with the government’s planned increase in National Insurance contributions set to take effect in April 2025.
The planned rise in employer National Insurance contributions, from 13.8% to 15%, may further strain already tight cash flows. This could lead to an increase in debt levels among self-employed individuals, as many may need to dip into their own savings to cover the shortfall.
Mental Health and Loneliness
The shift to remote working has resulted in heightened feelings of isolation among self-employed individuals. Research suggests that over 30% of homeworkers feel lonely either frequently or constantly, citing a lack of social interaction as a common challenge. By 2025, over 1.6 million homeworkers may be at risk of loneliness, a trend that seems set to persist.
Regulatory Challenges
The IR35 legislation, which seeks to tax “disguised” employment similarly to regular employment, remains a significant concern. The complexity and potential financial impact of IR35 have prompted many self-employed individuals to seek full-time employment as business opportunities slow down.
Gender Disparities
Female entrepreneurs face unique challenges, including receiving significantly less funding than their male counterparts, as well as dealing with unrealistic expectations and insufficient support, despite various initiatives. A recent critique of a Scottish government report highlights that if women-led businesses in Scotland exported at the same rate as male-owned businesses, the country’s trade could increase significantly. However, there is skepticism about the government’s commitment to addressing gender imbalances in business.
Increasing Entrepreneurial Intentions
Despite these challenges, there is a notable rise in the number of UK adults considering starting their own business. According to Enterprise Nation, nearly half (47%) of UK adults are thinking about starting a business or side hustle in 2025, a 12% increase from the previous year. This surge is driven by the need to earn extra income due to rising living costs and the opportunity to monetize personal skills or hobbies.
Conclusion
In summary, while the self-employed sector in the UK is seeing an increase in entrepreneurial intentions, individuals are still facing considerable challenges related to economic pressures, mental health, regulatory complexities, and gender disparities. Addressing these issues will be crucial to ensure the well-being and success of self-employed individuals in 2025 and beyond.