UK company size thresholds change from April 2025

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New legislation published by the government will increase the monetary size thresholds for micro, small and large-sized entities.

This follows an update from the Department for Business and Trade in October 2024. It confirmed the new government will proceed with most of the proposals (announced by the Conservative government in March 2024) on company sizes, and various amendments to the directors’ report.

The outlying group will be medium-sized companies. Changes for these businesses will be included in a 2025 consultation and review called The Future of Corporate Reporting.

From April 2025, two out of three of the following company or group size thresholds should be considered –

Company and group size thresholds (net) for financial years beginning on or after 6 April 2025

2 out of 3 of: Micro Small Medium Large
Annual turnover (£) <1m <15m <54m >54m
Balance sheet total (£) <500k <7.5m <27m >27m
Average number of employees <10 <50 <250 >250

Group size thresholds (gross) for financial years beginning on or after 6 April 2025

2 out of 3 of:  

N/A

Small Medium Large
Annual turnover (£) <18m <64m >64m
Balance sheet total (£) <9m <32m >32m
Average number of employees <50 <250 >250

The new size thresholds are also applicable to Limited Liability Partnerships (LLPs).

Audit exemption thresholds
Audit exemption thresholds will automatically increase in line with the small companies’ thresholds (as they have mirrored the small companies’ thresholds since 2012).

The increase will also apply for financial periods beginning on or after 6 April 2025.

Directors’ reporting
The directors’ report, and the directors’ remuneration report are being simplified, particularly where there have been overlaps in information requested, and on non-financial reporting.

Transitional provisions
The new approach will include interim plans that allow preparers to treat the amendments as having been applied in the year before when deciding the size of the company or LLP.

Therefore, these entities can take advantage of the increased size thresholds once the legislation becomes effective.

Conclusion
The changes aim to save UK companies money through deregulation, with a £240m per year figure being quoted. Those able to move down a size category will be entitled to a corresponding reduction in reporting requirements.

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