Self-Employed Tradespeople Suffer One of the Highest Business Debt Burdens
Posted by: electime 29th October 2026
New research from debt management firm Lowell into the debt burden of self-employed workers has found that the vast majority of people are in some kind of business debt, with some racking up more than £100k to keep their business afloat.
The study found that 72% of all self-employed people are in some kind of business debt, whether due to credit cards, unpaid tax bills, overdrafts, or outstanding invoices. However, some businesses hold higher rates of debt than the average.
The Self-Employed Sectors Facing the Highest Rate of Debt
| Rank | Industry | % in Debt |
| 1 | Transport delivery | 90.91% |
| 2 | Hospitality business owner | 90.00% |
| 3 | Legal services | 87.50% |
| 4 | Media entertainment | 84.62% |
| 5 | Marketing / PR / advertising | 80.00% |
| 6 | Financial services | 77.78% |
| 7 | Professional coach | 77.78% |
| 8 | Freelance digital / tech | 77.27% |
| 9 | Property / real estate | 77.27% |
| 10 | Retail business owner | 75.00% |
| 11 | Tradesperson | 73.68% |
| 12 | Engineering / technical contractor | 72.73% |
| 13 | Health & wellbeing practitioner | 70.00% |
| 14 | Construction contractor or subcontractor | 69.23% |
| 15 | Business consultant | 68.42% |
Self-employed tradespeople face one of the highest level of business debt of any industry surveyed. Almost 74% of those in the sector reported having some form of business debt, higher than the national average of self-employed workers, underlining the financial pressures faced by builders, electricians, plumbers and carpenters.
Tradespeople, particularly those who are self-employed, face significant financial pressures from rising material costs, fuel, transport, tools and equipment, alongside the challenge of securing a consistent flow of work. Late payments and unpaid invoices can leave tradespeople covering the upfront costs of materials and labour before receiving payment from customers. Cancellations, project delays and unpredictable demand can further disrupt cash flow, while the physical nature of the work means illness or injury can prevent them from earning, often without access to sick pay. With household bills and business overheads continuing regardless of whether work is available, these pressures can leave tradespeople struggling to cover essential expenses, build financial security or avoid relying on borrowing during quieter periods.
The financial pressures for entertainment workers come from a range of sources. The top five causes of financial stress reported by respondents were:
- Late payments – 40%
- Seasonal income – 23%
- Tax bills – 12%
- Rising business costs – 11%
- Unpredictable demand – 7%
Late payments are the most commonly reported source of financial stress, followed by sporadic seasonal income and tax bills. Rising business costs and unpredictable demand were also identified, highlighting the different financial pressures experienced by workers across the sector.
Among tradespeople who reported having debt, the estimated average amount owed is approximately £5,935 per person, based on the midpoint of each reported debt range. The most common debt level was between £501 and £1,000, reported by 26.2% of those with debt. At the other end, 4.8% owed between £50,000 and £74,999. Meanwhile, 26% respondents reported having no debt, highlighting that financial pressures within the trades industry do not always result in borrowing.
John Pears, UK CEO at Lowell shares his perspective on the high levels of debt within the self-employed community:
“We tend to treat business debt as a sign of operational failure, but for today’s self-employed, debt has quietly morphed into essential working capital. What these numbers really expose isn’t reckless borrowing which can often be associated with debt, but rather a systemic cash-flow trap built into the UK economy.
“Independent workers are effectively acting as interest-free banks for the sectors they serve. When corporate clients stretch payment terms to 90 days, HMRC demands tax on profits that haven’t even materialised, and non-negotiable overheads like vehicle leases, fuel, or business rates continue to pile up regardless of seasonal lulls, debt becomes the only bridge across the gap.
“The standard advice to ‘build a three-month cash buffer’ simply doesn’t hold up when relentless inflation continuously erodes profit margins. For an independent delivery driver or a boutique legal practitioner, taking on debt is an unavoidable part of the job. Until we address payment terms, reform tax structures like Payment on Account, and recognise that self-employed debt is subsidising the broader supply chain, these workers will keep using personal liabilities to absorb the economy’s volatility.”
For support on managing debt, visit Lowell.
