- Edinburgh and Manchester only areas outside South East in Top 30 highest earning locations
- Many other parts of UK seeing benefits too - from Sheffield to Belfast
The country’s top self-employed contractors are earning around three times the average UK wage, as a career path once seen as the “risky” option is paying off for an increasing number of highly skilled professionals, says the Professional Representation Network, the talent management service for contractors.
According to research by Professional Representation Network, the average annual earnings of the Top 100,000 contractors in the country is now approximately £80,000 per annum, compared to a national average income of £27,0001.
Professional Representation Network’s study looked at the earning power of contractors/self-employed professionals across the 650 parliamentary constituencies. Contractors are most heavily concentrated in IT, financial services, oil & gas, engineering and construction.
Its research found that in 31 of the areas, the average income of contractors put them in the higher rate income tax/dividend bracket.
The highest earners are in Central London and the City of London2 where nearly 20,000 contractors have average earnings of around£120,000 per year (see table below).
Kristian Gourlay, Director at Professional Representation Network, comments: “These findings illustrate the healthy state of contracting in the UK today. Such high levels of earnings suggest that for an increasing number of highly skilled professional people, working as a contractor is now a very attractive and rewarding career choice.”
“Most people recognise that the days of a “job for life” are over, so their perceptions of the risk/reward balance of being a self-employed contractor versus permanent employment are shifting.”
“Increasingly, what we are seeing is that many of the best opportunities as well as the highest pay are going to contractors. More and more employers are choosing to engage workers with the expertise they need on a contract basis rather than recruiting permanent employees for the most highly skilled and best paid roles.”
“As UK business moves towards higher and more specialised skills, and areas like technology, finance, energy and engineering continue to grow, contractors’ earnings should continue to outpace those of employees.”
Edinburgh and Manchester join London and South East in Top 30 highest earning locations
Professional Representation Network’s research found that 26 out of the top 30 areas where the highest paid contractors live are in London and the South East, but Edinburgh and Greater Manchester are also up there.
For example, Edinburgh South has an average contractor income of £57,000 (ranking 9th), while Altrincham and Sale West’s is £38,800 (rated 18th).
Professional Representation Network says there are several good reasons why Edinburgh offers such attractive pay rates to contractors. It is the second largest financial centre in the UK after the City and has the second largest gross value added3 of any UK region after London. With a number of new banks such as Tesco Bank and Virgin Money setting up headquarters alongside long-established financial institutions such as Royal Bank of Scotland and Standard Life already based there, the market for contractors is buoyant.
Manchester’s importance as a financial, commercial and industrial centre is a key reason why contractors living in Altrincham and Sale West – one of its commuter suburbs – are commanding such high rates of pay. The growing strength of its digital and media sectors based in the new MediaCityUK hub is an example of the extensive and highly paid work opportunities on offer for contractors basing themselves in the North West.
Many other parts of UK seeing benefits too - from Sheffield to Belfast
Says Kristian Gourlay, “The fact that we are seeing such high average earnings in large pockets across the country highlights how successful UK based contractors are in making the most of their skills whilst also retaining greater control over their own careers and lifestyle than is normally possible in conventional employment.”
“Clearly London and the South East is a flourishing environment for contractors seeking highly paid specialist work in a variety of sectors particularly in financial and professional services but also in IT, pharmaceuticals, creative and infrastructure.”
“However, contractors in many other parts of the UK are benefitting too. As well as Edinburgh and Manchester competing with South East for the best talent, contractors in areas such as Sheffield, Belfast and Renfrewshire all commanding higher than average UK incomes, putting these locations within our Top 50 highest earning parts of the country.”
Aberdeen is another up and coming “hot spot”, ranked just outside the Top 50, thanks to its large cluster of oil & gas contractors living in and around the city. The oil & gas industry makes a major contribution to the local economy and with its continued robust prosperity Professional Representation Network says Aberdeen is likely to climb up the league table in the future.
The area in Wales with the highest average income for contractors is Cardiff West (76th in the UK).
Adds Kristian Gourlay, “The issue of trends in contractor pay is a frequent topic of conversation with the contractor clients we manage. Although earnings are only one part of the story along with factors like job satisfaction and work-life balance, it’s important for professionals who are “going it alone” to know how they compare to their peers – both employed and self-employed.”
“These high levels of income are not achieved without tremendous skill and focus. Our aim is to help all contractors to achieve that focus, by acting effectively as their agents, helping them to maximise post tax earnings and by providing all the necessary support that enables them to concentrate on what they are best at – delivering real value for the organisations that hire them.”
Top 100 constituencies with the highest average income for self-employed/contractors
1 Source: HMRC
2 Kensington (ranked 1st) and the Cities of London and Westminster (ranked 2nd).
3Gross Value Added (GVA) measures an area’s contribution to the economy based on the value of its goods and services produced.