The 31st of January is a painful day for a growing proportion of the UK population. Figures released by HM Revenue & Customs revealed that 11.7m people were required to submit a self-assessment return and pay any tax due by this date — up from some 11.5m last year, the previous highest total.
This rise is not only due to the sheer volume of the UK workforce who class themselves as being self-employed but also because of a growing number of people who now have ‘other’ sources of income beyond their main one. Much of this comes via the internet and a variety of doors this has opened for people to generate additional revenue streams. For some, in time, this may also overtake their main income and become their career of choice.
The impact of technology has certainly changed the dynamic across the UK workforce, particularly when it comes to the younger generations. Research from Barclays Business Banking recently outlined how the popularity of video gaming among Gen Z will impact their career choices, potentially leading to skills shortages in more traditional professions. For example, 68% of respondents would choose a career in gaming over becoming a lawyer, 58% over being a doctor or nurse and 56% would rather work in the gaming industry than be a professional athlete.
As part of a study into the UK’s gaming culture, Barclays surveyed 2,003 8-18 year-olds and found that over half (54%) find that video gaming is more fun than the real world, with three in five (62%) suggesting that gaming is now their favourite hobby. Playing video games is equipping Gen Z with the skills required for future employment, with entrepreneurism flourishing among young gaming fans. Nearly half (45%) of respondents said they either streamed their gameplay on platforms like Twitch or wanted to, as it gives them the ability to earn money from posting their content.
Such opportunities generated by ever-evolving technology, social media and online platforms will continue to encourage more people to follow the self-employed route. Although it’s important to point out that this path is not necessarily the easy option or that it doesn’t open the gates to other obstacles, especially when it comes to homeownership.
According to research from Trussle, self-employed borrowers are struggling to get mortgage applications approved by lenders, resulting in an ‘access gap’ compared to those with more ‘traditional’ employment. This also revealed that self-employed people make up 23% of all ‘specialist’ cases received by lenders. Approval rates for this band of borrowers are up to 14% lower than other groups, at just 76%. Those with bad credit and those borrowing at a high loan to value (LTV) ratio had far more success, at 89% and 85% respectively. First-time buyers had the best approval rates overall at 90%, closely followed by the retired at 86%.
Workers, whether contracted, contractors or self-employed, should undoubtedly receive the rights to which they are entitled. Additionally, they should also retain the right to expect reasonable borrowing requirements to be achievable. Lenders do recognise this and are working hard to adapt criteria and better serve this growing community, but there remains room for improvement. What this data also underlines is the need for good professional advice within this area. And where demand is evident, opportunity is never far behind for proactive mortgage intermediaries.
Craig Calder is director of mortgages at Barclays