How The New Company Size Thresholds Affect Your Business

As announced back in December of last year, the Government amended the Companies Act to reflect larger monetary thresholds to establish a company’s size, starting from 6 April 2025.

These thresholds determine many things, like access to schemes and funding, but most importantly the accounting and reporting requirements for each company size. The increase of this thresholds, which has been quite substantial, effectively means that many UK companies start benefiting from reduced requirements.

The move has been welcomed by both industry bodies and business groups.

The New Thresholds

In the table below we show how the monetary thresholds for Turnover and Balance Sheet Total have been shifted by about 50% upwards.

		Micro		Small		Medium
	Previous	New	Previous	New	Previous	New
Turnover not more than:	£632k	£1m	£10.2m	£15m	£36m	£54m
Balance sheet total not more than:	£316k	£500k	£5.1m	£7.5m	£18m	£27m

It is important to note that there were no changes in the thresholds for number of employees, which remain 10 for micro entities, 50 for small entities and 250 for medium entities.

What Does This Mean For You

Companies that moved down from the large to medium-sized category are now exempt from certain Strategic Report requirements. Namely, the statement known as Section 172(1), detailing how directors have had regard to stakeholder and other interests.

If you are moving down from the medium entities into the small entities regimes you are now exempt from a statutory audit of your annual accounts and form producing a Strategic Reports. This will most likely translate to substantial savings on your accountants’ bill, as well as simpler accounting requirements.

If you are moving from the small to the micro regime you are now be exempt from producing a Directors’ Report.

Changes to Directors’ Report requirements

In addition to the above and across all applicable size categories, the new rules remove obsolete requirements within the Directors’ Report, in an effort to further reduce regulatory burden, particularly for non-financial reporting.

Information no longer required in Directors’ Reports for medium and large companies include:

• the use of financial instruments;
• important events that have occurred since the end of the financial year;
• likely future developments in the business of the company;
• research and development activities;
• the existence of branches outside the UK;
• the employment, training and advancement of disabled persons (this requirement is also removed from directors’ report requirements for small entities); and
• engagement with employees, suppliers, customers and others.

Further information changes can be found on ICAEW’s UK regulation for company accountants hub.