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MoneyWeek- What benefits are self-employed people giving up

Journalist: Marc Shoffman, Freelance

ended 08. July 2026

I am writing a piece for MoneyWeek looking at the benefits that self-employed people miss out on when they go solo e.g sick pay, parent leave, holiday pay, employer pension contributions.

Are there any I am missing and how much of a consideration should this be when going self-employed? How can people prepare for this, e.g should they be setting money aside and how much?

Is it fair and are people aware?

8 responses from the Newspage community

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Samuel Mather-Holgate
Managing Director & IFA at Mather and Murray Financial
The upside of self-employment is that you can design your own benefits package, and in many cases make it better than anything an employer would offer. The catch is that nobody else is quietly paying for it in the background. Income protection, life cover, private medical insurance, pension contributions, training, holidays and parental leave all have to be priced into your fees and paid for deliberately. That can feel painful, because the cost is visible in a way employer benefits rarely are. But visibility is not the same as waste. Many of these costs may be tax-deductible where they are genuine business expenses, and pension contributions can be tax-efficient too. The real mistake is treating self-employment income as take-home pay. A self-employed person needs to build the employer into their own pricing, otherwise freedom can quickly become fragility.
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
One thing many people don't consider before becoming self-employed is the impact it can have on their mortgage options over the next few years. While some lenders will consider applicants with just one year's accounts, many offer their widest range of options once there's a longer trading history. Those early years can also involve lower profits as businesses invest and grow, which may reduce how much you can borrow. It shouldn't put anyone off starting a business, but if you're also planning to buy your first home or move within the next couple of years, it's well worth factoring into your decision.
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Robert Engeham
Quote from Robert Engham, of Your Company Formations: https://www.yourcompanyformations.co.uk/

"When people come to us to register their business, they're usually focused on the freedom that self-employment brings but there are things they're leaving behind. Employer pension contributions, paid annual leave, statutory sick pay, potentially private healthcare, life insurance. These don't disappear, but they become your responsibility to replace rather than your employer's to provide.

You'll need to budget for your own Income Tax and National Insurance rather than having it handled through PAYE, and depending on your profession, professional indemnity, public liability and income protection insurance are all worth considering from the outset.

My standard advice before anyone registers is this: build an emergency fund of at least three to six months of living expenses and remember to set money aside for taxes.
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Anita Wright
Chartered Financial Planner at Ribble Wealth Management
Ask a SE person why they went solo and you'll get the same three answers: more money, more freedom, no boss. All true. What it leaves out is the invoice that never arrives. Replicating an employed package, pension, insurace cover, paid time off, quietly swallows a 5th to a 3rd of gross income on top of tax. Nobody prices it in, because benefits are invisible right up until you need them. It isn't unfair. Autonomy and tax flexibility are real compensation, and in a healthy market the rate carries the cost. The problem is the grey zone. In the gig economy, SE has become a way of handing someone all the risk while keeping none of the promises, employment minus the bits that cost the employer money. The pension is the smoking gun. SE pension participation now sits at roughly 20% against about 80% for employees, having collapsed from around half in the late 1990s. Auto enrolment fixed it for employees by removing the decision. The SE still have to make it, and mostly don't.
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Paul Denley
CEO at Oakham Wealth Management
A salary is only part of the package. Sick pay, holidays, parental leave and pension contributions are the obvious losses when going solo, but the hidden costs run deeper: life cover, medical insurance, training budgets and the unpaid hours spent finding work and chasing invoices. Even borrowing can become harder to access.

A self-employed income may need to be materially higher than an equivalent salary simply to stand still. Before taking the leap, it is worth putting a value on every benefit given up, not just headline pay.

It is wise to build a cash buffer of 3 to 6 months' expenditure, set aside money for tax as you earn and contribute regularly to a pension to replace employer funding. Consider income protection where prolonged illness would bite.
Is it fair? Greater risk is part of the price of independence. The real issue is awareness: many only appreciate employment benefits once they lose them. Compare the whole package, not just the payslip.
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Nouran Moustafa
Practice Principal & IFA at Roxton Wealth
The biggest thing self-employed people underestimate is that they are not just losing a salary. They are losing the hidden benefits wrapped around employment: employer pension contributions, sick pay, paid holiday, employer-funded parental leave, redundancy rights, death-in-service cover, private medical cover, training budgets and sometimes bonus structures.

Going solo can be brilliant, but your price has to include the benefits you used to get for “free”. I would not compare a freelance day rate to an employee salary. I would build a benefits pot from day one: tax, pension, holiday, sick leave, insurance and quiet months. As a rough starting point, many people should be setting aside at least 25-30% of income before they even touch personal spending, and more if their earnings are irregular.

Is it fair? Not always. Is it understood? Definitely not. Too many people go self-employed for freedom, then realise the safety net was part of their pay packet all along.
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Sarah Davies
PR at https://balanceatwork.co.uk/
“When people take the leap into self-employment, they’re usually focused on the freedom but the financial safety net you had as an employee disappears overnight, and most people don’t realise this.

The obvious ones are sick pay, holiday pay, parental leave and employer pension contributions. There’s also the mental load of now having to do your own taxes. But the freedom and earning potential is absolutely worth it!

My advice for anyone going self-employed is this: build separate pots before you hand your notice in to cover things like emergency and sick pay. That doesn’t mean you can’t start side hustling, lots of my clients start businesses around their 9-5 at first until they’re ready+equipped to be self-employed full time.

It’s not entirely fair as the world hasn’t quite kept up with the reality millions in UK are choosing to be self-employed. But self-employed can be lucrative when done with the right scaffolding. When pricing factor in all the things you're missing out on!
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
What benefits you give up when switching from employment to self-employment very much depends on the type of role you are leaving. Many employers give their employees little beyond the legal minimum, so the switch to self-employment losses you little more than statutory sick pay and pension contributions. However, if you are in a more senior role then the situation can be vastly different. I work with a lot of legal professionals and the move from being an employed solicitor to a self-employed consultant solicitor is a great example; as an employee they will benefit from death in service, good sick pay arrangements and maybe a group income protection scheme, alongside private healthcare and pension contributions, possibly with smaller perks like gym membership too. As a self-employed person you can recreate all these benefits, even improve on them, and certainly more personalised, but it is one of the things often forgotten about in the switch over, which is then a huge risk.