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Struggling strivers: Self-employed face highest debt burden

22 January, 2013 

The self-employed are struggling under a debt burden over four times greater than those in full or part-time employment, according to the Consumer Debt and Money Q3 report from StepChange Debt Charity.

The report, commissioned from the Cebr (Centre for economic and business research) by the charity, found that when compared to those in full or part-time employment, the self-employed are financially worse off every month, have higher mortgage debts and have significantly higher levels of non-mortgage borrowing.

The precarious position of self-employed people’s finances is highlighted in the report by figures that show the average debt load of a self-employed person coming to the charity is 18.6 times their annual income; this stands in stark contrast to the average debt load of those in full or part-time employment which is just 4.1 times their annual income.

Income and expenditure

According to the report’s findings, self-employed people seeking help from the charity earn an average of £1,321 (net) per month, 14 percent less than those in full or part-time employment, who earn an average of £1,542. Compounding the problems faced by the self-employed is the fact that their monthly expenditure is higher: the average self-employed client has a monthly budget deficit of £211, compared with a monthly surplus of £74 for those in full and part-time employment.


Mortgages make up the bulk of the difference between the two groups’ debt burden. The average self-employed person seeking debt help from the charity owed £206,500 on their mortgage, compared to £54,600 for their full or part-time counterpart.

Unsecured and secured (non-mortgage) borrowing

The report found that the average levels of non-mortgage borrowing among the charity’s self-employed clients stands at £42,500, whereas for those in full or part-time employment it is £24,200. The difference in credit card borrowing illustrates the marked difference in the fortunes of the two groups: the self-employed have on average accumulated debts of £16,100 on their cards, compared to £6,894 for those in full or part-time employment.

Commenting on the findings, StepChange Debt Charity external affairs director Delroy Corinaldi said: “The unsecured debt levels of the self-employed indicate that people are taking on significant debts in order to invest in their businesses. However, with lower income levels, servicing these debts is likely to become increasingly problematic and too often the debt burden can become too much to bear”.

“The personal finances of the self-employed are often tied very closely to the fortunes of their businesses. According to Cebr, the number of insolvencies for 2012 is expected to be higher than at any point since the financial crisis, meaning the financial position of many self-employed people will be extremely perilous, now or in the very near future”.

Contact the the StepChange news team on:

Tel: 0207 391 4583

Mobile: 07950 469 101

Email: press@stepchange.org

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