NerdWallet reveals freelancers’ earning potential in the UK. Plus, research has revealed why the move to freelance is not as risky as it used to be, and can be a smart move for those driven to fulfil their earning potential
In an exclusive survey of 500 business owners on behalf of The Freelance Informer, NerdWallet UK researchers found that the average business owner or self-employed working in the UK earns over £90,000 per year, and has the opportunity to earn over £40,000 more than the average UK salary.
With higher taxes being imposed on British businesses, more firms are cutting headcount, and the idea that a full-time job is always the “safe” option is looking increasingly outdated.
Sarah Fleming, a personal finance expert at NerdWallet UK, shares her tips to make the career move to freelance, or essentially miss out on an average annual wage increase of £40,000. Plus, she shares how much your fellow business owners plan on increasing their rates.
A common misconception that deters many full-time employees from even considering freelance work is that it’s not a safe option. However, in 2025’s business climate, that just isn’t true.
–Sarah Fleming, NerdWallet UK
The £90k average annual income figure comes from the recent survey of 500 UK business owners and self-employed professionals across 28 industries, from finance to hospitality. For example, IT business owners reported an average annual income of £136,779.80.
The research also found:
- 28% of freelancers and business owners reach their first £100k in revenue within just 1-2 years
- 23% earn between £75,001-£100,000 per year, placing them well above the national average salary
- 24% plan to increase their business prices by 6-10% over the next year, signalling growing confidence in earning potential
- On average, business owners still work for around 35.4 hours per week – comparable to full-time employees
| How much do UK business owners earn annually? (Salary, dividends, and bonuses, before tax) | % of Business Owners |
| £20,000 or less | 16% |
| £20,001 – £30,000 | 9% |
| £30,001 – £40,000 | 8% |
| £40,001 – £50, 000 | 9% |
| £50,001 – £75,000 | 14% |
| £75,001 – £100,000 | 23% |
| £100,001 – £250,000 | 11% |
| £250,001 to £500,000 | 4% |
| £500,001 or more | 3% |
| Average | £90,878.81 |
| How long does it take the average UK business owner to earn £100k in revenue? | % of Business Owners |
| Less than 6 months | 12% |
| 6 to 11 months | 22% |
| 1-2 years | 28% |
| 2-5 years | 15% |
| Longer than 5 years | 5% |
| N/A – I haven’t hit £100,000 in revenue yet | 15% |
| Average | 1.7 years |
| % Hike UK business owners plan to raise prices in the next 12 months | % of Business Owners |
| 0% – I am not planning to raise my prices in the next 12 months | 12% |
| 1-5% increase | 22% |
| 6-10% increase | 24% |
| 11-15% increase | 11% |
| 16-20% increase | 9% |
| 21-30% increase | 6% |
| 31-40% increase | 2% |
| 41-50% increase | 6% |
| 51-75% increase | 2% |
| 76-100% increase | 1% |
| Over 100% increase | 1% |
| Average | 14.5% |
FI: Why is freelancing no longer considered a risky career move?
Sarah Fleming: “With businesses already squeezed by national insurance hikes and general speculation of further tax rises this Autumn, many organisations are feeling jittery about their profit margins. Our recent survey at NerdWallet UK found that almost one in five business owners expect to cut staff hours or wages in the months ahead.
“With business closures hitting the high street across the UK – from Claire’s Accessories to Poundland – working a full-time job is no longer a guarantee of income security.
“Freelancing, on the other hand, lets you spread out this risk by working with multiple clients, allowing you to diversify your income. So, if one client slows down work, your career won’t halt right there and then.
The numbers show that it pays off, too. For example, the average self-employed worker – be they a business owner with several employees or sole trader – hits £100,000 in revenue in under two years. Additionally, nearly a quarter (23%) earn between £75,000-£100,000 annually – well above the national average salary.
“Business confidence amongst freelancers is growing, too. Around 24% of business owners plan to increase their rates by 6-10% over the next year, NerdWallet UK found, hinting at the strength of the market and potential earning power. Despite these incredibly high earnings, business owners work, on average, 35.4 hours a week. This is almost the same as a full-time job, but with far more control over the future and workload.
“When these figures are compared against rising taxes, reduced job security, and longer hours for full-time employees, freelancing is no longer the ‘risky’ choice. It’s the smarter one.”
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Tips from Sarah on financial products that make the leap to freelancing or starting a business smoother:
1. How to best keep track of your freelance income
“When you start freelancing, opening a business bank account isn’t just about looking professional; it’s about making your day-to-day finances easier to manage.
“Considering that one in three freelancers and business leaders still manage finances manually with spreadsheets or pen and paper, it comes as no surprise that UK business owners spend an average of 7 hours on financial management tasks per week, costing them an average of £17,917 in lost earnings annually. For freelancers, that makes it all the more important to explore business banking tools that can save time, reduce stress, and make running a business more efficient.
“Ultimately, the best business account for you depends on how you prefer to track income and expenses, streamline tax returns, and whether you value extras like invoicing tools, receipt uploads, and accounting features.”
2. Understanding ‘needs’ versus ‘wants’ for your business insurance
“Business insurance isn’t a luxury or something only necessary for large companies; it’s a safety net that many clients will expect you to have.
“It protects you against any future risks, and it’s worth researching your options carefully to make sure you’re properly covered.
“The right small business cover ultimately depends on what you do. For example, employers’ liability is a legal requirement for almost everyone who has staff, professional indemnity may be needed in certain industries (accountancy, surveying, engineering, etc.), and motor insurance is essential if vehicles are part of your work.
“But beware of over-insuring; focus on cover that’s genuinely relevant to your work. This will help you strike the right balance between comprehensive protection and cost-effectiveness.”
3. Weigh up your freelance start-up financing options
“If you’re just starting out in self-employment, it could be worth exploring whether small business loans could give you and your business the financial confidence to grow.
“The appeal of a business loan is clear for newly self-employed people; it can help cover the cost of new equipment, stock, staff, or even marketing materials, alongside helping to manage the cash flow if revenue is slow to begin with.
“Loan rates are often lower than those for credit cards or overdrafts, and successful repayments can strengthen your business credit score. This is great for enabling better borrowing terms later on, all the while retaining full ownership of this business venture.
“These loans work by providing your business with a lump sum that you repay, with interest, in regular instalments over an agreed period of time. To qualify, you’ll usually need to be at least 18, a UK resident, and running a UK-based business. Beyond that, lenders often set their own criteria, which can include how long you’ve been trading, your annual turnover, and both your business and personal credit history.
“However, for freelancers, the key is weighing up whether a loan will genuinely support the growth and stability of their business, or whether alternative funding routes might be a safer first step.”
4. Get accounting software ready for Making Tax Digital in 2026
“Accounting software can make the jump to freelancing far less stressful. It saves time by automating tasks like invoices, expense tracking, and taxes, avoids the risk of human error, and ultimately gives you a clearer picture of your cash flow, which is essential when managing your own income for the first time.
“From April 2026, self-employed people and landlords earning over £50,000 will be required to keep digital records and submit quarterly tax updates using HMRC-approved software. Those earning above £30,000 will join the scheme a year later, in April 2027.”
Sarah says the good news is that finding the right platform is straightforward: “HMRC provides an official list of approved software, and many leading business bank accounts now include MTD-compliant accounting tools as part of their package.”
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