A third (34%) of contract workers, such as gig workers on online platforms and independent contractors, are reliant on credit to pay household bills, almost three times the UK average (13%), finds new research from responsible lender, Creditspring.

With an estimated 1.1 million people having missed the 31st January deadline to file their Self Assessment tax returns, many freelancers and gig workers risk further financial instability, with penalties for missing the deadline starting at £100.

Young gig workers (18-34), who make up 43% of the gig worker workforce, are at the highest risk as around four in ten (44%) are reliant on credit to pay for household bills.

Gig workers and other contractors already faced significant financial struggles in the lead up to the tax assessment deadline – 45% say they’re most financially unstable they’ve ever been, much higher than the UK average of 26%. Penalties for missing the Self Assessment deadline will worsen the situation for many.

Over four in ten (44%) say they’re getting by but only because they have savings to fall back on, compared to less than three in ten (29%) people across the UK. This figure rises to over half (53%) of 18-34 year olds doing contract or gig work.

Worryingly, 39% admit they have completely run out of savings and almost four in ten (36%) gig workers have also been forced to rely on government benefits during the last 12 months – over double the UK average of 14%.

Three in ten (29%) have had to seek advice from a debt charity in the last 12 months, with 18-34 year olds 34% more likely to be in this situation.

In order to avoid debt spirals, contract workers, particularly those who may have missed the Self Assessment deadline, need enhanced access to more affordable and transparent credit options that will not worsen their financial situation.

This is not a small group in society. Last year, research found that the number of people on zero-hour contracts increased by 136,000 during 2023, with three out of four of the 1.1 million people on these contracts not having job security**.

Neil Kadagathur, CEO and Co-Founder of Creditspring, comments: “Millions of people are attracted to the flexibility offered by the growing gig economy, yet this line of work can often present greater financial instability than a permanent role.

“Gig workers and those on short-term contracts often report that although they are increasingly reliant on credit, their borrowing options are in decline due to their irregular income, and they face no choice but to turn to predatory or high-cost lenders.

“Those on flexible contracts, such as gig workers, need to have access to safe, simple and affordable short-term credit options that will help them manage their cashflow between contracts or provide an extra boost that won’t send them deeper into a debt spiral but rather help them to get back on track.”

Creditspring’s Benefits Finder helps ensure users have access to all the available financial support they may be entitled to but have yet to claim by identifying benefits they maybe be eligible for. On average, the tool has found that individuals could be entitled to £963 per month in additional financial support. 

Creditspring’s innovative model offers an FCA-regulated credit subscription service that responsibly offers short-term, affordable credit to borrowers, specifically to people with poor credit files or irregular incomes such as contract or gig workers. Members pay a fixed membership fee every month to allow them to access two no-interest loans per year with clear repayment terms, capped total costs and no hidden charges, late fees, confusing interest rates or risk of debt spirals.