Yorkshire’s freelancers need to work an extra three weeks a year to match what employees receive

New findings calculate the true cost of self-employment, showing that Yorkshire freelancers effectively need to work nearly three extra weeks every year to break even with full time employees.

New research from business insurance provider Protectivity has revealed the true financial cost of working for yourself for the UK’s 4.57 million self-employed workers.

The self-employed community are essential to the UK economy, contributing £366 billion in 2024 alone, and while a global study found that 0% of self-employed people regret leaving traditional employment, the research reveals a significant financial gap affecting freelancers.

Protectivity’s data shows that the average self-employed worker in the UK is missing out on £6,428 worth of workplace benefits every year compared to what the average employee receives through paid annual leave, statutory sick pay and employer pension contributions.

The research also reveals that the typical freelancer would need to work an additional 16.5 days (more than three full working weeks) on top of their normal workload every year to break even with an employed worker.

Holiday, sick pay, pension: what self-employment really costs

Paid annual leave: £4,704

Full time employees in the UK are entitled to 28 days of paid annual leave per year including bank holidays, which for an employee on the average median salary of £39,039 equates to £4,704 of paid time off.

Sick pay: £740

The average UK employee takes 4.4 sick days per year, worth an estimated £740 at median earnings, which would usually be covered by their employer at full salary. On the opposite side of the spectrum, 79% of self-employed people who took a period of sickness absence in the last year said they received no income whatsoever during that time.

Recent research found that self-employed workers take 35% fewer sick days than employees, not because they’re healthier, but because they ‘can’t afford’ to take time off.

Pension contributions: £984

Under auto-enrolment rules, employers must contribute a minimum of 3% of qualifying earnings into an employee’s pension, which is worth approximately £984 a year at the median salary.

Compounded over a full working career at a standard 5% annual growth rate, those missed employer contributions could amount to more than £119,000 in lost retirement savings.

How the financial gap varies by region

Protectivity’s analysis found that London’s freelancers face the steepest shortfall, missing out on an estimated £8,243 worth of workplace benefits per year, which is more than £2,800 above the national average and 60% higher than self-employed workers in Northern Ireland, where the gap stands at £5,157.

With 16.5% of Londoners currently self-employed, the highest of any UK region, the capital also has the largest concentration of people experiencing this shortfall, with London’s freelancers needing to work an additional 21 days, equivalent to more than four working weeks, to match what an employee receives in workplace benefits.

In Yorkshire, the gap stands at:
Paid annual leave: £4,188
Employer sick pay: £658
Pension contributions: £854
Total missed benefits: £5,700

That means the average Yorkshire freelancer would need to work an additional 14.6 days to break even with employees.

Why self-employment can still be the right choice for many workers

Despite the financial gap, the nation’s appetite for self-employment has never been stronger with data showing that those who have made the leap are unlikely to look back. A recent study found that more than half of freelancers say their work-life balance improved since working for themselves, with flexibility and autonomy consistently cited as the main reasons.

As the second HMRC Payments on Account deadline of the 31st July approaches, the data shows that self-employment is showing no signs of slowing down, but it’s essential for freelancers to have a clear understanding of what needs to be planned for to minimise financial stress.

Aaron Gilmore, Founder and Strategic Tax Advisor at TreyBridge Accountants, says awareness of the gap is improving, but action still lags behind:

“Most people are aware they no longer receive paid holidays or company sick pay, but many underestimate the true value of the wider package that employers provide. Pension contributions, income protection and paid leave can collectively be worth many thousands of pounds each year and when you’re self-employed, replacing that value is entirely your own responsibility.”

“The good news is that there are practical steps self-employed individuals can take to bridge the gap without significantly impacting their lifestyle or business growth. I encourage clients to view pensions, protection policies and emergency savings as essential business foundations rather than optional extras. Even modest monthly contributions can make a substantial difference over time thanks to tax relief and compound growth.”

“Self-employment remains one of the most rewarding ways to build a career or business, offering flexibility, autonomy and significant growth potential. However, the individuals who thrive long term are typically those who proactively create the financial protections and benefits that an employer would otherwise provide.”

On the July deadline specifically, Aaron adds: “Use this period as an opportunity to review not only tax liabilities but also wider financial resilience. Assess whether pension contributions are on track and consider whether there are sufficient reserves in place to cover periods of reduced income. The most successful self-employed individuals tend to be those who treat financial planning as an ongoing process rather than a once a year exercise.”

Case study: A self-employed jeweller who has found a balance between saving and growth

Amy Stringer has run her own jewellery and ceramics business for over a decade, creating and selling her own work alongside running workshops from her Leeds studio. She comments:

“I’ve been self-employed for over ten years now and I genuinely wouldn’t change it. The freedom to build something that’s entirely your own, on your own terms, is something I find really fulfilling. But there are real financial realities that come with that choice that I don’t think people always talk about openly enough.

“When I first started working for myself, I didn’t really think about things like sick pay or pension contributions – you’re so focused on getting the business off the ground that the longer term financial picture can take a back seat. It took a few years before I properly got to grips with what I was actually missing out on compared to friends in employment, and the gap is bigger than most people realise.

“What I’ve learned over the years is that being self-employed means you have to think like your own HR department, your own finance team and your own pension provider all at once. It’s completely manageable once you get your head around it, but I do think there’s a real need for more honest conversation about the financial side of going it alone – not to put people off, but to help them go into it with their eyes open and properly prepared.”

Chris Trotman, Head of Sales and Underwriting at Protectivity adds:

“Self-employed workers are an essential part of the UK economy, and it’s clear that the vast majority wouldn’t trade the flexibility or autonomy that working for themselves allows. It does, however, come with financial risks that employment automatically absorbs and a lot of people don’t fully grasp the scale of that gap until they’re up against it.

“Understanding the true value of what you’re not receiving is the first step towards putting the right protections in place to mitigate the impact. That includes saving a comfortable portion each month for planned time off, periods of sickness, and pension contributions, whilst also making sure you have the right business insurance in place to minimise risk and protect what you’ve worked so hard to build. The sooner freelancers build those foundations, the stronger their overall position becomes.”