THE UK’S MICRO-BUSINESSES are struggling to prepare for the implementation of auto-enrolment as staging dates loom over the coming year, research from Intuit Quickbooks has found.
Auto-enrolment costs are estimated to be £8,900 per small business, yet 40% of the UK’s smallest and most vulnerable businesses believe it will cost nothing to set up, while a further 11% think it will only cost up to £5,000.
Not only that, it takes an average of 103 days to implement per SME, yet around 85% of those polled think it will take 50 or less.
According to the research, some 34% of micro-business owners will offset any financial implication from implementing auto-enrolment and the increased contribution into staff pension pots by capping staff salaries and/or bonuses. Around 19% also claim they will have to reduce employee benefits and entertainment as a result. Only 37% of businesses will take on the costs by using business working capital.
The financial and administrative strain caused by auto-enrolment is also set to force some micro-businesses to consider non-compliance. The research revealed that 56% would be tempted to encourage staff to opt out of the scheme if they were unlikely to be found out by The Pension Regulator. And 68% would be prepared to miss their staging date, despite the £400 starting fine in place for doing so.
Intuit UK vice-president and managing director Rich Preece said: “Given that auto-enrolment will affect almost every person across the UK in some way, we were surprised to see how many micro-businesses are still unprepared for the legislation.
“It is worrisome that these vulnerable businesses may not be taking the necessary steps to ensure their business will not only comply with their initial staging date, but be set up for the on-going impact that workplace pensions will have on their business. It’s important they act now to educate themselves on the issue and put systems in place to manage the tasks ahead.”