New regulations increasing company size thresholds will be effective from April 2025
The government has published new legislation to increase the monetary thresholds for micro, small and medium-sized entities.
The change reflects the desire to reduce complexity and reduce the reporting burden on companies, also recognising the impact of inflation since previous thresholds were set in 2013.
New monetary size threshold changes (effective from 6 April 2025)
Thresholds are 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: | £632k | £1m | £10.2m | £15m | £36m | £54m |
| Balance sheet total* 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 |
* i.e., total assets
The increased thresholds will similarly apply to limited liability partnerships (LLPs).
Impact
Companies able to move down a size category will be entitled to the accompanying reduction in reporting and audit requirements. The biggest impact will be companies that move from medium to small and therefore become exempt from the requirement to have a statutory audit (subject to group size) and from the need to prepare a Strategic Report.
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, allowing companies to benefit as soon as possible after the legislation comes into effect.
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