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New RTI rules drive up the cost of compliance

Small and medium-sized businesses have experienced an increase in compliance costs over the last two years, according to a new report.

The research from the Forum of Private Business (FPB) suggests that the cost of complying with regulations has risen by 8.5% since 2011, with the total cost of compliance now exceeding £18.2bn.

A large proportion of the increase is attributed to the introduction of the new real time information (RTI) regime, which involves fundamental changes to the PAYE system.

The study revealed that spending on external providers of payroll and tax support has increased by 11% since 2011.

Robert Downes, FPB policy adviser, expressed concerns over the likely future impact of the pension auto-enrolment regulations. However, he welcomed the news that health and safety costs have fallen slightly, and predicted that these costs will fall further with the introduction of changes to workplace health and safety rules later this year.

‘The changes in October should really see health and safety costs come down as the onus shifts to employees having to take more of a responsibility for their own safety in the workplace, and the end of strict liability for employers will mean firms can’t be held responsible for accidents beyond their control’, he commented.