With 40% of SMEs forced to deal with four or more regulators and government bodies including Companies House and local authorities the annual cost of compliance is soaring with the average SME paying  £7,100 a year, found research from the Playing by the Rules report from the Federation of Small Businesses (FSB).

The FSB said the annual cost of complying with regulation was £36bn in 2025 for SMEs with these companies cumulatively spending 379 million hours of work a year on red tape and bureaucracy.

For SMEs with more than 10 staff the annual bill was £12,600 on average, while under nine employees it was £6,200, and £2,500 for sole traders.

The majority (70%) of SMEs have to deal with more than one external regulator or government body, with 40% said they work with four or more.