Self-employed individuals are facing a "long-term but avoidable decline" in the sector, according to the Association of Independent Professionals and Self-Employed (IPSE).
The warning comes as the Office for National Statistics (ONS) revealed that the number of self-employed individuals in the UK decreased by 174,000 for the five months to September 2020, as a result of the COVID-19 crisis.
This leaves the sector at 4.53 million self-employed individuals, a fall from 5.1 million at the end of 2019.
Derek Cribb, chief executive of IPSE said the continuing drop in the number of self-employed in the UK shows that the "glaring gaps" in support are leading to "long-term, avoidable" decline in the sector.
Cribb said:
"After the 2008 financial crisis, it was rising self-employed numbers that kept unemployment comparatively low - as uncertain employers looked for more flexible expertise instead of permanent employees.
"Now, this does not appear to be happening and the self-employed sector is in precipitous decline. Some self-employed are finding their way into full-time roles, but many others are joining the record flow into unemployment."
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