Company accounts reporting thresholds increasing for the first time in over a decade

The government has today confirmed the increased turnover and balance sheet thresholds in annual accounts for the first time since 2013, to reduce the reporting and audit burden for companies.

The effective date is 6th April 2025, and the uplift in thresholds is part of a drive to cut complexity and reduce the reporting requirements on companies. It also accounts for the impact of inflation since the previous thresholds were set.

The new rules increase thresholds by approximately 50% on the turnover and balance sheet criteria that determines whether a company is a micro-entity, small, medium-sized, or large, for the purpose of reporting and audit requirements, under the Companies Act 2006.

The increased turnover and balance sheet total thresholds will also apply to limited liability partnerships (LLPs).

The government estimates that this will save companies an estimated £240.2m in annual costs by reducing the reporting burden. It will see 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.

As a result, many companies will benefit from lighter touch financial and non-financial reporting requirements which may help soften some of the recent costs imposed on businesses in the latest budget.

The changes follow a Department for Business and Trade consultation on reporting, where a majority of respondents (59%) said that current reporting thresholds for business were no longer appropriate as they had not been updated for a number of years; and had a disproportionately negative impact on smaller companies.

New thresholds

• Micro entities and micro-entity LLPs: not more than £1m turnover; not more than £500,000 balance sheet total
• Small companies and LLPs: not more than £15m turnover; not more than £7.5m balance sheet total
• Medium-sized companies and LLPs: not more than £50m turnover; not more than £25m balance sheet total
• Large companies and LLPs: any company that exceeds at least two of the medium-sized company criteria.

*Group companies have been impacted inline with the above.

In order to bring in these changes swiftly, the transitional provision allows reporters to decide a particular company size by reference to a previous financial year, so that the amendments made by these regulations are treated as having applied in those previous years.

This is so companies and LLPs can benefit from the new thresholds as soon as possible after the legislation comes into force.

Although not specifically addressed in the announcement, current audit exemptions apply to those organisations that qualify as small or micro companies, so it is envisaged the updated thresholds will be applied to the audit criteria.

These regulations come into force on 6th April 2025, and we will update as soon as we have further guidance.

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Give us a call on 01872 267 267, or email us contact@whyfield.co.uk

Table from ICAEW