Tax compliance costs small businesses nearly £25 billion a year with many finding dealing with HMRC has increased their personal stress, according to the latest FSB report.

The findings, from the Taking a Toll: Small businesses and the cost of tax compliance report, show that the average small firm spends £4,500 and 44 hours a year just on tax compliance.

These annual totals include time spent actually trying to contact HMRC with no less than 60% of business owners saying that dealing with HMRC has raised their personal stress levels.

Tina McKenzie, FSB's policy chair, said: "Tax compliance is far from a niche issue - it affects all five and a half million small businesses in the UK and collectively costs the UK nearly £25 billion and over 240 million hours.

"This is money and time that could be far, far better spent on building up their business. The overall cost to the economy in terms of lost growth and wasted productivity is enormous.

"Given the challenges facing the economy, and the need for growth, reducing the burden placed on small firms by tax compliance must be a priority. And HMRC should be included in the Government's drive to make regulation better support growth."