Britain's self-employed workforce is losing valuable income and time to the relentless burden of business administration, according to new research. A comprehensive study has revealed that the typical self-employed professional dedicates a staggering 17 hours every month to paperwork and compliance tasks.
The Hidden Cost of Being Your Own Boss
This substantial time commitment represents more than just an inconvenience. The research, commissioned by Virgin Money, calculated that this administrative burden equates to £3,000 in lost potential earnings annually for the average self-employed worker. The survey of 500 self-employed individuals and small business owners uncovered widespread frustration with the current system.
Nearly half of respondents (45 per cent) admitted they 'dread' tax return season and actively put it off for as long as possible. More concerning is that 53 per cent rated tax administration as the most stressful period of their entire year, while 49 per cent agreed their life would significantly improve if business admin was easier to manage.
Administrative Challenges and Real Consequences
The tasks consuming the most time include managing client communications, logging receipts and expenses, and the dreaded process of filing tax returns. This administrative overload is having tangible negative effects on business operations.
21 per cent of business owners confessed to missing client payments due to being overwhelmed by paperwork, while 16 per cent had failed to pay suppliers for the same reason. The research also highlighted problematic financial practices, with 47 per cent using their personal current account for both business and personal finances, and 57 per cent operating without any dedicated software or apps to manage their business administration.
Digital Transition and Support Solutions
The research comes at a critical time as the government prepares to implement its Making Tax Digital initiative. From April next year, sole traders earning more than £50,000 in qualifying income will be required to switch to digital-only tax returns and provide quarterly updates on their earnings.
Alarmingly, the survey found that 45 per cent of respondents were unaware of these upcoming changes, with a further 63 per cent unaware they would need to provide quarterly earnings updates.
Simon Norman, Head of Business Bank at Virgin Money, commented: "Doing your tax return doesn't have to be daunting, but our research has shown it's a real headache and many see tax admin as the biggest stress of their jobs. Government changes are on the way, so it's important those affected by these updates are aware of what's coming."
In response to these findings, Virgin Money is offering customers of its M Account for Business six months' free access to the accounting app Xero, which is recognised by HMRC software to aid the transition to digital returns. The bank is emphasising the importance of preparing for these changes to ensure a smooth transition to the new digital requirements.
