The size of company determines accounting disclosures required and whether or not a statutory audit is required.
From 6 April 2025 the monetary thresholds to define the size of a company are changing. The table below sets out the new size thresholds that will be met for a financial year if any two of the three criteria are met.
| Micro | Small | Medium | ||||
| Current | New | Current | New | Current | New | |
| Turnover not more than | 1£632k | £1m | £10.2m | £15m | £36m | £54m |
| Balance sheet total (total assets) not more than | £316k | £500k | £5.1m | £7.5m | £18m | £27m |
| Monthly average number of employees not more than | 10 | 10 | 50 | 50 | 250 | 250 |
The government estimates that the new regulations will result in around 113,000 companies and LLPs moving from the small to micro-entity category, 14,000 moving from medium-sized to small and 6,000 moving from large to medium-sized. Companies able to move down a size category will be entitled to the accompanying reduction in reporting and audit requirements.
The legislation includes a transitional provision for the application of the “two-year consecutive rule”. When determining company size for a financial year beginning on or after 6 April 2025, the transitional provision allows preparers to assume that the new thresholds had been applicable in the previous financial year. This look back is only available for the application of the two-year rule. As a result, companies and LLPs can benefit from the threshold uplift as soon as possible after the legislation comes into effect.
Please get in touch today if you are unsure and require any clarification about this topic.