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Changes in UK Company Size Thresholds: Impact on Company Accounts Reporting

Company Accounts

Are you a company director in the UK and aware of the changing company size thresholds? The new regulation will be effective from April 2025 and will remove certain requirements from company accounts reporting. This article will note the new thresholds and explain the impact on reporting requirements.

What are The New Size Thresholds of UK Companies?

If your company meets two of the three criteria for company size thresholds in two consecutive financial years, this will affect your company’s accounts reporting requirements. Additionally, please note that transitional rules apply for early implementation. The new size thresholds are outlined in the table below:

Thresholds

Micro

Small

Medium

Turnover Not More Than

£1m
(previously £632k)

£15m
(previously £10.2m)

£54m
(previously £36m)

Balance Sheet Total (i.e. Total Assets) Not More Than

£500k
(previously £316k)

£7.5m
(previously £5.1m)

£27m
(previously £18m)

Monthly Average Number of Employees, Not More Than

10
(no change)

50
(no change)

250
(no change)

 

The increase in thresholds aims to simplify processes and decrease the reporting requirements for companies. It also considers the effect of inflation since the previous thresholds were established in 2013.

What is the Impact of Threshold Uplift?

According to the new thresholds, approximately 113,000 companies will transition from the small entity category to the micro-entity category. Consequently, these companies are exempt from producing a Director’s Report and may prepare their company accounts under FRS 105, which simplifies and streamlines the overall reporting process.

Furthermore, it is estimated that approximately 14,000 companies are transitioning from medium-sized to small-entity categories. As small entities, these companies are exempt from the statutory audit of their annual accounts (subject to group membership implications) and may use FRS102 1A instead of full FRS 102 accounts. Additionally, they are not required to produce a Strategic Report and can benefit from simplified accounting requirements.

Finally, approximately 6,000 large companies are transitioning to medium-sized entities. These companies can benefit from exemptions from certain Strategic Report requirements, including a statement on how directors have considered stakeholder and other interests as outlined in section 172 of the Companies Act 2006, known as the Section 172(1) statement.

Concluding Remarks

You may benefit from the new thresholds pertaining to company size. We recommend consulting with your professional accountants to review your specific situation.

At Stan Lee Accountancy, we specialise in working with Small and Medium Enterprises (SMEs) and provide comprehensive company accounts preparation services, including business tax (excluding audit).

Please contact us today to discuss how we can assist with your company’s accounts reporting needs.