UK small firms have experienced an above-inflationary increase to their annual compliance bills, according to new research by the Forum of Private Business.
SMEs are paying £713 more in 2014, with the total cost of compliance now totalling £19.2 billion – a four per cent increase on last year.
Small firms appear to have been hit hardest, with compliance bills for companies with less than nine employees totalling the equivalent of £164 per employee – almost seven times the cost for firms with 50 or more staff.
The key contributory factor for the compliance increase would appear to be payments to external contractors which are increasing twice as quickly as internal business costs.
The single biggest outlay for UK start-ups remains tax compliance, followed by employment law and health and safety.
However, the most worrying impact of the regulatory changes on ambitious small businesses is the increasing time required to understand and implement the numerous compliance changes.
This creates unnecessary barriers to day-to-day operations, with SMEs said to have lost a total of £38.85 billion in missed opportunities – up by almost £1 billion on last year.
Phil Orford MBE, chief executive of the Forum of Private Business, said: “Our research shows little has changed in terms of what’s costing small business the most for compliance costs, with external costs continuing to be the main contributory factor.
“We believe this is largely down to the introduction of RTI, following the end of the small business extension, and firms having to pay a payroll specialist to manage their employees’ PAYE bills.
“In addition, we have seen the increasing need to employ specialists to advise ahead of pensions auto-enrolment.”
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