The UK government is planning to increase the thresholds that determine the size categories for companies. Originally announced by the Conservative government in March 2024, on 14th October 2024 the new Labour government confirmed it would stick to the plans and increase the thresholds.
This change, set to start on 6 April 2025, means companies might be classified into smaller categories, simplifying their financial reporting requirements, and saving money.
The proposed new thresholds are below, two out of the three must apply:
Current Company Size Thresholds
|
Annual Turnover |
Balance Sheet Total |
Average No of Employees |
| Micro-entities |
Below £632,000 |
Below £316,000 |
Less than 10 |
| Small companies |
Below £10,200,000 |
Below £5,100,000 |
Less than 50 |
| Medium companies |
Below £36,000,000 |
Below £18,000,000 |
Less than 250 |
| Large companies |
Above £18,000,000 |
Above £36,000,000 |
More than 250 |
Proposed Company Size Thresholds from 6th April 2025
|
Annual Turnover |
Balance Sheet Total |
Average No of Employees |
| Micro-entities |
Below £1,000,000 |
Below £500,000 |
Less than 10 |
| Small companies |
Below £15,000,000 |
Below £7,500,000 |
Less than 50 |
| Medium companies |
Below £54,000,000 |
Below £27,000,000 |
Less than 250 |
| Large companies |
Above £27,000,000 |
Above £54,000,000 |
More than 250 |
The changes will also apply to Group companies:
Current Group Size Thresholds
|
Annual Turnover |
Balance Sheet Total |
Average No of Employees |
| Micro-entities |
N/A |
N/A |
N/A |
| Small companies |
Below £12,200,000 |
Below £6,100,000 |
Less than 50 |
| Medium companies |
Below £43,200,000 |
Below £21,600,000 |
Less than 250 |
| Large companies |
Above £43,200,000 |
Above £21,600,000 |
More than 250 |
Proposed Company Size Thresholds from 6th April 2025
|
Annual Turnover |
Balance Sheet Total |
Average No of Employees |
| Micro-entities |
N/A |
N/A |
N/A |
| Small companies |
Below £18,000,000 |
Below £9,000,000 |
Less than 50 |
| Medium companies |
Below £64,000,000 |
Below £32,000,000 |
Less than 250 |
| Large companies |
Above £64,000,000 |
Above £32,000,000 |
More than 250 |
Around 132,000 companies could benefit from these changes, potentially saving them over £240 million annually.
This move aims to ease the financial and administrative burden on businesses, specifically the audit exemption thresholds which is directly linked to the small companies threshold. This means that from 6th April 2025, most companies classified as ‘Small’ (two out of the three; an Annual Turnover less than £15 million, a Balance Sheet total of less than £7.5million or less than 50 Employees) will not be required to get an audit for their annual accounts.
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