15% of the entire British workforce is now freelance, but struggle to access loans and mortgages due to a lack of regular income
The number of British workers turning to freelancing is growing at an exponential rate with the arena accounting for almost 5 million members of the UK workforce. Not only are swathes of workers choosing to work in a freelance and flexible capacity, but they are contributing huge amounts to the British economy -IPSE estimates that freelancers contribute £130 billion to our nation’s economy.
However, despite the fact that flexible working and freelance working is rapidly becoming an attractive option for many a Brit, freelancers are far more likely to be refused loans because they don’t meet the standard mortgage criteria of a monthly salary or other form of regular and reliable income. One of the key reasons for this is that freelancers do not receive payments in a timely manner due to the irregularity and inconsistency of poor payment systems.
Many employers and recruitment companies are relying on archaic payment systems which do not guarantee regular and reliable payments to compensate freelancers for their work. Given that 15% of the UK workforce is now freelance, these inconsistent payments and outdated financial products are putting nearly 5 million Brits at risk of being unable to secure a mortgage loan.
The imminent inception of the IR35 tax legislation in April 2020 is another factor which will further restrict freelancers from accessing financial products available to regular salary workers. The new rules will force private sector companies to be responsible for deciding if a freelancer or contractor’s employment status is correct – rather than the individual deciding it themselves. The consequence of IR35 could see a freelance worker’s net income reduce by 25%; when one takes into consideration that freelancers are already struggling to get loans approved because the structure of their finances does not align with a traditional style of work, freelancers that are not being paid in a timely and regular fashion are at even greater risk of losing out on loans which regular payments would make available to them.
As a result of these implications, the employers and recruiters who can guarantee regular, timely payments to their freelancers are going to see a drastic increase in available talent and competitive rates from their workers. ETZ Payments back office software automates a huge quantity of operations which would typically be subject to lengthy administrative tasks and human error, and will allow freelancers to receive their payments in a manner which reduces hassle and vastly improves regularity and speed.
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