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By Jonathan London on 28th March 2014
New research from the Professional Representation Network has claimed that the top UK contractor earnings are three times more than the country’s average wage. The study found that the top 100,000 contractors in the UK earned an average of approximately £80,000 per year, significantly higher than the national average of £27,000.
Once regarded as the ‘risky’ way of working, the talent management service now believes that highly skilled professionals are reaping the financial rewards of such a career path.
Looking at wages from self-employed freelancers and contractors from across the UK’s 650 parliamentary constituencies, the research found that most self-employed professionals were operating in IT, oil and gas, financial services, engineering and construction.
What’s more, it was discovered that the average income of freelance professionals placed them in a higher bracket with regards to rates of income tax and dividends in 31 one of the surveyed areas.
Perhaps unsurprisingly, Central London contained contractors who earned the highest average wage, with almost 20,000 earning approximately £120,000 per annum.
Kristian Gourlay, director at Professional Representation Network, said:
These findings illustrate the healthy state of contracting in the UK today. Such high levels of earnings suggest that for an increasing number of highly skilled professional people, working as a contractor is now a very attractive and rewarding career choice.…
Most people recognise that the days of a ‘job for life’ are over, so their perceptions of the risk/reward balance of being a self-employed contractor versus permanent employment are shifting.”
Ms Gourlay went on to add that many of the best opportunities were going to contractors with the specific skills required for the role. She added that many firms were choosing to engage workers… on a contract basis as opposed to hiring permanent staff.
As UK business moves towards higher and more specialised skills, and areas like technology, finance, energy and engineering continue to grow, contractors’ earnings should continue to outpace those of employees,… she explained.
This research could go some way to explaining why more people are turning to self-employed freelancing as a way to earn a living in the UK.
Another recent study, jointly conducted by the Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) and e-commerce firm Etsy, has suggested that the number of people who work as self-employed freelancers will outnumber those working in the public sector by 2018.
The report, which is set to be published later in 2014, predicts that self-employment figures will rise to the five million mark in four years’ time, whereas the number of those working within the public sector will drop to 4.9 million.
Whilst the financial rewards on offer to those people choosing a freelance career path are obviously beneficial (albeit a lot of hard work is also required!), a contractors income is often apportioned differently compared to a standard employee, which could make the comparison seem a little dramatic. If the contractor operates through a Limited Company, they are likely to have increased take home pay through the tax efficiencies this option provides.
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