Real time payroll pushes compliance costs up 8.5% since 2011


Small businesses in Britain are paying substantially more in order to comply with tax, employment and health and safety legislation than they did two years ago, according to the Forum for Private Business (FPB).

New research by the small business support organisation has found that the total cost of compliance across the UK is more than £18.2billion, up 8.5% since the last time the research was carried out, in 2011.

This is despite a government pledge to reduce the amount of time and money spent by small businesses on compliance. The research also found that businesses are paying 11% more to external providers of payroll and tax support since 2011, and Robert Downes, policy adviser at the FPB, cites the introduction of the Real Time Information (RTI) payroll process as a main cause of this.

Downes said, “Our research shows little has changed in terms of what’s costing small businesses the most in compliance costs. The stand out-surprise has to be the huge increase in spend on external contractors.”

HMRC had anticipate the cost of RTI, which launched in April, to small business to be around £120m, however the Forum has estimated it to be a massive £311m.

“Businesses are having to pay a payroll specialist to manage their employees’ PAYE bills, but by contrast some are paying out slightly less on internal compliance managed in-house. The logic seems to be to pay an expert to do a job they an no longer do themselves, for whatever reason,” said Downes.