Self employed face mounting financial challenges

UK Debt Expert has warned that self-employed people and small business owners are facing mounting financial challenges as debt levels rise and expensive winter months approach.

The recent Autumn Statement introduced changes that may add strain to small business finances, particularly with an increase in National Insurance contributions and Maxine McCreadie from UK Debt Expert has raised warnings about business owners putting strain on their personal finances to plug gaps.

Recent UK Debt Expert data has highlighted the scale of the issue, revealing that over 5,000 self-employed workers have sought financial help for personal debts in the past six months alone. For many, debt levels are significant with more than half (51%) owing over £10,000.

Credit cards are the most common source of concern, with 39% of those seeking help relying on short-term borrowing to cover everyday expenses.

The debt specialist also identified a 34% increase in searches for County Court Judgments (CCJs) advice – highlighting an increase in anxiety over their long-term implications.

While the budget included measures like extended energy support and increased public services funding, small businesses and self-employed workers continue to face increased operating costs.

The planned rise in employer National Insurance contributions from 13.8% to 15% could further strain already limited cash flow, potentially leading to a rise in debt levels across this group if owners have to dip into their own savings to plug gaps.

The rise in National Insurance contributions adds to a series of challenges looming in 2025. Small businesses are already bracing for soaring energy bills, higher overheads driven by an increase in the minimum wage, and new costs associated with the EU General Product Safety Regulation.

This regulation will require businesses exporting goods to the EU to appoint a representative for product safety, further straining budgets.

Maxine McCreadie, a Personal Finance Expert at UK Debt Expert, said “Our data reveals a stark picture for self-employed people and small business owners when it comes to their personal debts. The combination of policy changes, escalating cost and pressures around operational costs, like energy bills, is creating a perfect storm for many small business owners. For those already struggling, these additional financial burdens could tip them over the edge.

“It’s vital that self-employed workers and SMEs take proactive steps to manage their personal finances and debts, these include seeking financial advice early, exploring government options and making more informed decisions to protect cash flow.

“The resilience of this sector is crucial to the UK economy, and targeted measures are needed to ensure their survival in the coming years.”