Small Businesses Face £25bn Tax Compliance Burden, FSB Reports

Small businesses in Britain are spending nearly £25 billion annually on tax compliance due to the complexity of the UK tax system and poor service from HM Revenue & Customs (HMRC), according to research by the Federation of Small Businesses (FSB). The average small firm incurs £4,500 and spends 44 hours each year on compliance, with many business owners reporting increased stress and lost productivity as a result. Poor customer service from HMRC, including lengthy phone wait times and slow responses, further exacerbates the burden, diverting time and resources away from business growth and investment. Despite calls from the FSB and other groups for HMRC to be included in the government's drive to reduce regulatory barriers, the agency has thus far been left out of Chancellor Rachel Reeves's regulatory reforms. The FSB argues that streamlining HMRC's processes could significantly reduce these costs and better support economic growth. The expansion of HMRC's Making Tax Digital programme is also causing confusion among some firms, with a notable proportion unaware of new digital requirements.