Regulatory Impact Assessment Template (Costs, Benefits, SME Test)

Regulatory Impact Assessment: [Proposal title]

A regulatory impact assessment (RIA) sets out the problem a proposed regulation is meant to solve, the options considered (including not regulating), the costs and benefits of each option, who bears them, the effect on small and medium-sized businesses, and how the measure will be monitored and reviewed. The structure is neutral so that any public body can use it, with two dated examples of national practice: the UK Better Regulation Framework (guidance of September 2023, web pages updated 5 September 2025) together with HM Treasury's Green Book (2026 edition, updated 28 October 2026), and the European Commission Better Regulation Guidelines (November 2021) and Toolbox (December 2025 edition). Replace every [bracketed] value and every row marked Example. This is a documentation format, not legal or economic advice: check the current official guidance of your jurisdiction and ask your analysts and lawyers.

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Contents

1. Summary sheet
2. Problem under consideration and rationale for intervention
3. Policy objectives
4. Options considered
5. Baseline and evidence
6. Costs and benefits of each option
7. Impact on small and medium-sized businesses
8. Wider and distributional impacts
9. Risks, uncertainty and sensitivity analysis
10. Preferred option and justification
11. Implementation, enforcement and compliance
12. Monitoring, evaluation and review
13. Consultation and scrutiny record
14. Glossary and references
15. Standard and licence note

1. Summary sheet

Example (Veldmark lift inspection register, amounts in k, 10-year appraisal, 3.00% real discount rate):

2. Problem under consideration and rationale for intervention

2.1 Problem statement

[Describe what is happening now, the evidence that it is a problem, and how it will develop if nothing changes. Quantify the harm where you can: number of incidents, people affected, money lost, time wasted.]

Example: Veldmark has an estimated 41,000 passenger lifts in commercial and residential buildings. Owners must have each lift inspected every 12 months, but the records stay with the owner. In the last three years the inspectorate found that 9% of lifts involved in reported incidents were overdue for inspection, and it learned this only after the incident.

2.2 Rationale for intervention

Example: information failure (the inspectorate cannot see compliance) and externality (lift users and emergency services bear the cost of a failure the owner could have prevented).

2.3 Why existing measures are not enough

[Explain which current rules, guidance or enforcement tools already apply and why they do not solve the problem.]

3. Policy objectives

4. Options considered

4.1 Alternatives to regulation

[List the alternatives you considered: information campaigns, self-regulation or co-regulation, industry codes, standards, incentives, use of existing enforcement powers. Explain why each was or was not taken forward.]

5. Baseline and evidence

Key assumptions:

6. Costs and benefits of each option

6.1 Method

• Appraisal period: [N years], price base year [YYYY], present value year [YYYY].
• Discount rate: [rate and source]. As an example of national practice, the Green Book (2026 edition, discounting update of 28 October 2026) sets a real social time preference rate of 3.00% for years 1 to 30, 2.50% for years 31 to 75 and 2.25% from year 76. The European Commission's Toolbox covers discounting in Tool #64. Check the current rate before each version of the RIA.
• Costs and benefits are in real terms (general inflation removed) before discounting.
• Optimism bias: [adjustment applied to costs, durations and benefits, and its source].

6.2 Cost and benefit categories

6.3 Worked appraisal

Example: 10-year appraisal, year 0 is the first year, 3.00% real discount rate, amounts in k. Business costs are one-off in year 0 plus an annual cost every year. Benefits are avoided incident costs to society and accrue to people outside the business, so the direct benefit to business is taken as zero.

How the figures are built: each yearly amount is multiplied by the discount factor 1 / 1.03^t for year t from 0 to 9. The sum of the ten factors (the annuity factor) is 8.7861. The equivalent annual direct cost to business is the present value of business costs divided by that factor, for example 6,372 / 8.7861 = 725 for option 3. NPSV is PV benefits minus PV costs to business and the public sector. The benefit-cost ratio is PV benefits divided by total PV costs. Use your framework's own metric definitions (for example the UK EANDCB, which nets direct benefits to business against direct costs, and reports in a set price and present value year).

6.4 Non-monetised impacts

7. Impact on small and medium-sized businesses

National practice examples (check the current text):

• UK: Annex 3 of the Better Regulation Framework guidance (September 2023) asks for a small and micro business assessment (SaMBA, up to 49 employees) and an assessment of whether medium-sized businesses (50 to 499 employees) can also be exempted, with exemption as the starting point. The SaMBA is mandatory above the ±£10 million EANDCB threshold.
• EU: the "SME test" is Tool #23 of the Better Regulation Toolbox; the competitiveness check is Tool #21.

Example: owners of five or fewer lifts hold 38% of lifts (ASM-03) but, according to the incident data, account for a lower share of overdue-inspection incidents. Option 3 keeps 2,650 of the 3,100 k annual benefit of option 2 (85%) while cutting the annual business cost from 1,300 k to 600 k. Exemption ends after three years, when the free upload service is in place.

8. Wider and distributional impacts

9. Risks, uncertainty and sensitivity analysis

10. Preferred option and justification

[State the preferred option, how it meets each objective in section 3, how it compares with the other options, and what the decision depends on.]

Example: Option 3 is preferred. It has the highest NPSV (13,815 k) and the highest benefit-cost ratio (2.46), meets OBJ-01 and OBJ-02 by year 3 and meets OBJ-03 by exempting small owners while the free upload service is built.

11. Implementation, enforcement and compliance

12. Monitoring, evaluation and review

National practice example: the UK framework expects a post-implementation review stage after a measure comes into force and a review provision in the regulation unless the explanatory memorandum explains why one is not appropriate. Use the Post-Implementation Review template (project/post-implementation-review) for the review itself.

13. Consultation and scrutiny record

Scrutiny examples:

• UK: measures with an EANDCB above ±£10 million need an options assessment scrutinised by the Regulatory Policy Committee before collective agreement, unless an exclusion applies, and a final impact assessment laid in Parliament with the legislation.
• EU: impact assessments are reviewed by the Regulatory Scrutiny Board (Toolbox Tool #3).

14. Glossary and references

14.1 Glossary

14.2 References

15. Standard and licence note

Based on the UK Better Regulation Framework guidance (September 2023) and the Green Book (2026 edition), both UK government publications, and on the European Commission Better Regulation Guidelines (2021) and Toolbox (December 2025 edition). The structure is a neutral synthesis and the text is original; no wording is copied from those documents. Thresholds, discount rates and scrutiny rules change: check the current official guidance of your jurisdiction before each version of the assessment. This template is not legal or economic advice; involve your analysts, lawyers and better regulation unit.

Template licence: MIT.