Company size thresholds increase will be welcomed
Legislation increasing the company size thresholds means more companies will be eligible to claim audit exemption and prepare financial statements under a less onerous reporting regime.
The UK government published The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303) on 9 December 2024, which come into force for financial years beginning on or after 6 April 2025.
The previous Conservative government proposed increasing the company size thresholds in March 2024. There was, of course, a general election in the summer of 2024 and these proposals were not subsequently mentioned in the King’s Speech in July 2024, indicating that they had been moved down the list of priorities by the new Labour government.
On 14 October 2024, the Department for Business and Trade announced that it would be pressing ahead with the increase in company size thresholds and various amendments to the directors’ report. It did, however, confirm that it would not be going ahead with plans to redefine a medium-sized company (as indicated in the original proposals) as this would be included in a more holistic project that will form part of the Future of Corporate Reporting. This consultation is expected to be launched in 2025.
As a reminder, the new company and group size thresholds are shown in the table below.
Company and group size thresholds (net) for financial years commencing on or after 6 April 2025
2 out of 3 of:
Micro
Annual turnover (£) ≤1m
Balance sheet total (£) ≤500k
Average number of employees ≤10
Small
Annual turnover (£) ≤15m
Balance sheet total (£) ≤7.5m
Average number of employees ≤50
Medium
Annual turnover (£) ≤54m
Balance sheet total (£) <27m
Average number of employees ≤250
Large
Annual turnover (£) >54m
Balance sheet total (£) >27m
Average number of employees >250
Group size thresholds (gross) for financial years commencing on or after 6 April 2025
2 out of 3 of:
Micro
Not applicable
Small
Annual turnover (£) ≤18m
Balance sheet total (£) ≤9m
Average number of employees ≤50
Medium
Annual turnover (£) ≤64m
Balance sheet total (£) ≤32m
Average number of employees ≤250
Large
Annual turnover (£) >64m
Balance sheet total (£) >32m
Average number of employees >250
The new size thresholds are also applicable to limited liability partnerships (LLPs).
The previous Conservative government proposed increasing the company size thresholds in March 2024. There was, of course, a general election in the summer of 2024 and these proposals were not subsequently mentioned in the King’s Speech in July 2024, indicating that they had been moved down the list of priorities by the new Labour government.
On 14 October 2024, the Department for Business and Trade announced that it would be pressing ahead with the increase in company size thresholds and various amendments to the directors’ report. It did, however, confirm that it would not be going ahead with plans to redefine a medium-sized company (as indicated in the original proposals) as this would be included in a more holistic project that will form part of the Future of Corporate Reporting. This consultation is expected to be launched in 2025.
As a reminder, the new company and group size thresholds are shown in the table below.
Company and group size thresholds (net) for financial years commencing on or after 6 April 2025
2 out of 3 of:
Micro
Annual turnover (£) ≤1m
Balance sheet total (£) ≤500k
Average number of employees ≤10
Small
Annual turnover (£) ≤15m
Balance sheet total (£) ≤7.5m
Average number of employees ≤50
Medium
Annual turnover (£) ≤54m
Balance sheet total (£) <27m
Average number of employees ≤250
Large
Annual turnover (£) >54m
Balance sheet total (£) >27m
Average number of employees >250
Group size thresholds (gross) for financial years commencing on or after 6 April 2025
2 out of 3 of:
Micro
Not applicable
Small
Annual turnover (£) ≤18m
Balance sheet total (£) ≤9m
Average number of employees ≤50
Medium
Annual turnover (£) ≤64m
Balance sheet total (£) ≤32m
Average number of employees ≤250
Large
Annual turnover (£) >64m
Balance sheet total (£) >32m
Average number of employees >250
The new size thresholds are also applicable to limited liability partnerships (LLPs).