Handelsbanken Wealth & Asset Management research shows self-employment is changing.
More than 600,000 self-employed people think they will miss the January 31st deadline for completing self-assessment tax returns and paying any money owed, new research from Handelsbanken Wealth & Asset Management shows.
Data from HM Revenue and Customs (HMRC) shows that a week before the deadline (January 24th), around 3.4 million had still to file returns for the 2021/22 tax year and it is expecting 12 million returns in total compared with 10.8 million for the 2020/21 tax year.
Handelsbanken Wealth & Asset Management’s research found young men aged 18-34 are most likely to believe they will miss the deadline, with 13% of them fearing they won’t respond in time.
The study highlights how the rising number of self-assessment returns reflects changes in the way people are employed.
It found half (50%) of working adults say they are a PAYE employee with no additional income while, more than a quarter (28%) are retired, meaning that nearly a third (29%) – 9.4 million people –are self-employed in some capacity.
Many will have PAYE jobs and self-employment income on the side, while some will be entirely self-employed.
Men (25%) are more likely than women (16%) to have an income stream from self-employment, while younger adults aged between 18 and 34 are much more likely to be self-employed at 40%, compared with older age groups.
Just 20% of those aged 35 to 54 are self-employed to some extent, and only 10% of those aged 55-plus have additional self-employed income.
The West Midlands is the UK’s ‘capital of the side hustle’, with 21% of workers saying they are PAYE with additional self-employed income compared to 10% for the UK as a whole.
Overall, the West Midlands has the highest number of people who make money through self-employment, with 33% of adults needing to fill in a self-assessment tax return, ahead of London (32%) and the South West (28%).
The rise of the side hustle is partly down to the cost-of-living crisis, but is also being driven by people deciding to follow their passion alongside their PAYE employment.
More than a third (35%) said they became self-employed to do something they are passionate about, while around a quarter (24%) did it to supplement the income they receive from their main job, due to the pandemic and cost-of-living crisis.
Job satisfaction is more important to younger people, with 24% of those 18-34 saying they became self-employed because they were not enjoying their job, dropping to 21% for 35–54 and just 10% for the over 55s.
Mark Collins, Head of Tax at Handelsbanken Wealth & Asset Management said:
“While tax doesn’t have to be taxing, as the old HMRC adverts say, filling in self-assessment forms becomes a little more complicated when people have a range of income streams from different sources.
“There is plenty of help available from HMRC however there is the possibility of a £100 fine for being late with further penalties kicking in after three months.
“This highlights the importance of seeking advice, being organised and keeping a close eye on your tax records, including business income and outgoings, throughout the year.”
Anyone struggling to complete forms can visit GOV.UK to access a wide range of resources including guidance, webinars and YouTube videos.
