UK ministers target £450m savings by slashing SME paperwork rules

UK businesses could save £450 million under plans by Business Secretary Jonathan Reynolds to slash corporate reporting requirements and exempt some small and medium-sized enterprises from certain form-filling altogether.

The Department for Business, Innovation, Science and Trade announced the proposals on 5 September, arguing that current reporting rules impose disproportionate burdens on small operators. The department called it "nonsensical" for businesses such as cafes, hotels and furniture makers to conduct detailed paperwork when they should be focused on day-to-day trade.

The scale of the problem, according to the department's own figures, is striking. The average annual report and accounts of some businesses now runs to 98,000 words. The department compared that to JRR Tolkien's fantasy novel The Hobbit, which exceeds 95,300 words. For FTSE 100 companies, the average is higher still: 152,000 words per report.

"No one goes into business to fill out forms," Reynolds said.

"For years, hardworking firms in this country have been weighed down by pen-pushing paperwork and frustrating costs, ticking boxes that do nothing to help them grow their business," he said. "We're stripping back outdated bureaucracy and building a commonsense system fit for a 21st-century economy."

The business secretary framed the reforms as a direct cost intervention. "This will cut the cost of doing business, giving breathing room to bosses across the country and free them up to focus on what they do best, creating jobs and growth," Reynolds said.

The £450 million figure represents the department's estimate of total savings available to UK businesses if the corporate reporting changes take effect. The plans would simplify existing rules and remove entire categories of reporting obligations for qualifying SMEs, rather than merely trimming requirements across the board.

A consultation on the proposals opens on 7 September, giving businesses and industry bodies two days' notice from Saturday's announcement to prepare responses. The consultation will determine how the exemptions are defined and which reporting exercises small firms can drop.

If the reforms survive consultation and translate into legislation, the compliance burden on Britain's SME sector — which spans the cafes, hotels and furniture makers the department singled out — would shrink materially. The outcome of the 7 September consultation will signal how far the government is willing to go in rewriting corporate reporting for the smallest firms in the economy.