Is AI going to steal your job – or will you be able to use it to your advantage? And is the recent decrease in job listings a good or a bad thing for freelancers? It’s an interesting time for freelancers and contractors and that’s set to continue into 2025.
Wondering what could be coming up for your business next year? Keep reading to see six predictions about the state of freelance work.
Will 2025 bring…
1. An urgent need to embrace AI?
AI has been a hot topic for several years now, but recent developments suggest that 2025 is a year for change. AI has come a long way – and with easy access to tools like ChatGPT and Google Gemini, as well as Apple’s new inbuilt Apple Intelligence, there are less barriers to introducing it into your professional life too.
As a busy freelancer, you can use generative AI to lighten your workload for things like drafting proposals, transcribing notes, and summarising emails. You can also use it to help with areas outside of your expertise, such as marketing or copywriting.
A recent study from Fiverr also found that AI was the top missing skill in UK businesses – with 18 per cent of business leaders surveyed saying they hire freelancers who have AI skills full time employees don’t.
Looking to upskill in this area? Read our guide to AI for small businesses for some ideas.
2. An end to late payments?
The new Labour government’s Fair Payment Code launched in December 2024, so will start affecting the self-employed in 2025. This voluntary code of practice gives larger businesses who work with freelancers and contractors an award based on their payment record.
Businesses can be categorised one of three ways:
- Gold – for businesses that pay 95 per cent of their suppliers within 30 days
- Silver – businesses that pay 95 per cent of their small business suppliers within 30 days and all other suppliers within 60 days
- Bronze – businesses that pay 95 per cent of suppliers within 60 days
Additionally, the Small Business Commissioner will be given greater enforcement powers to ensure small businesses and freelancers are getting paid on time. And with our own research showing that small businesses were owed an estimated £32 billion in late payments in 2023, this is sure to be a positive change in the freelance world.
3. More clarity for contractors under umbrella companies?
The 2024 Autumn Budget revealed plans to crack down on exploitative umbrella companies who fail to comply with IR35 regulations. This means that the responsibility for paying the correct income tax and National Insurance contributions will fall on the employer and not the contractor.
While this new legislation won’t come into effect until April 2026, HMRC recently published an online tool designed to help contractors better understand payment from umbrella companies. This new tool was published in December 2024, meaning freelancers will be able to use it for their 2025 contracts.
4. Higher day rates for freelancers?
The new year could be the time to increase your day rate, according to a recent study from the Association of Independent Professionals and the Self-Employed. The study revealed that the average day rate of UK freelancers increased from Q2 to Q3 2024, from £457 to £576.
The same study revealed that the freelancers surveyed expected their day rates to further increase 12.2 per cent in the next year.
If you think it’s time to increase your earnings, our guide to setting a freelance rate can help.
5. Increased costs for freelancers outside IR35?
Fiverr’s recent data also reveals that 83 per cent of businesses believe Labour’s Budget will impact their business. This is largely in part to the increase of Employer National Insurance contributions – which are set to rise to 15 per cent from April 2025.
This increase, combined with a lower earnings threshold and an increase in corporation tax, could affect both umbrella contractors and limited company contractors. Umbrella contractors could see a reduction in their take home pay, while limited company contractors may find it harder to negotiate contracts.
6. Less job vacancies?
Job vacancy website Reed recently reported the number of job vacancies posted on its website had fallen 13 per cent between October and November – and is now 26 per cent lower than a year ago.
This is supported by recent data from the Office of National Statistics, which also revealed that the number of job vacancies fell by 31,000 between September and November.
While this accounts for the job market as a whole and isn’t limited to just freelance and contract work, it suggests changes for the self-employed.
Either businesses will be unable to hire full time staff and will instead look to contractors, meaning more employment opportunities, or the decrease in overall opportunities will include freelancers too.
Do you have any other predictions that may affect freelancers and contractors in 2025? Let us know what you’ve heard in the comments below.
Helpful guides for freelancers
- What does being inside IR35 mean? A guide for the self-employed
- How to do a self-employed tax return
- What are the best freelance websites?
- What type of business insurance do I need?
Looking for self-employed insurance?
With Simply Business you can build a single self-employed insurance policy combining the covers that are relevant to you. Whether it’s public liability insurance, professional indemnity or whatever else you need, we’ll run you a quick quote online, and let you decide if we’re a good fit.
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