Third of contractors reliant on credit

A third (34%) of contract workers, such as gig workers on online platforms and independent contractors, are reliant on credit to pay household bills, almost three times the UK average (13%) according to research by responsible lender Creditspring.

With an estimated 1.1 million people having missed the 31st January deadline to file their Self Assessment tax returns, many freelancers and gig workers risk further financial instability, with penalties for missing the deadline starting at £100.

Young gig workers (18-34), who make up 43% of the gig worker workforce, are at the highest risk as around four in ten (44%) are reliant on credit to pay for household bills.

Gig workers and other contractors already faced significant financial struggles in the lead up to the tax assessment deadline – 45% say they’re most financially unstable they’ve ever been, much higher than the UK average of 26%. Penalties for missing the Self Assessment deadline will worsen the situation for many.

Over four in ten (44%) say they’re getting by but only because they have savings to fall back on, compared to less than three in ten (29%) people across the UK. This figure rises to over half (53%) of 18-34 year olds doing contract or gig work.

Worryingly, 39% admit they have completely run out of savings and almost four in ten (36%) gig workers have also been forced to rely on government benefits during the last 12 months – over double the UK average of 14%.

Three in ten (29%) have had to seek advice from a debt charity in the last 12 months, with 18-34 year olds 34% more likely to be in this situation.

Neil Kadagathur, CEO and Co-Founder of Creditspring said “Millions of people are attracted to the flexibility offered by the growing gig economy, yet this line of work can often present greater financial instability than a permanent role.

“Gig workers and those on short-term contracts often report that although they are increasingly reliant on credit, their borrowing options are in decline due to their irregular income, and they face no choice but to turn to predatory or high-cost lenders.

 “Those on flexible contracts, such as gig workers, need to have access to safe, simple and affordable short-term credit options that will help them manage their cashflow between contracts or provide an extra boost that won’t send them deeper into a debt spiral but rather help them to get back on track.”