Company Size Changes – Know the facts!
Did you know that UK company size thresholds are changing on 6 April 2025?
Probably not – these changes have not been well advertised or communicated. In effect, the thresholds at which a company or LLP moves from being classed as Micro to Small, Small and Medium, and Medim to Large are all increasing by around 50%.
The government hopes that these changes will result in less admin “red tape” for around 113,000 businesses that will move from Small to Micro, 14,000 that will move from Medium to Small, and 6,000 that will move from Large to Medium.
While the turnover and balance sheet thresholds are being increased sizeably, the number of employees threshold will remain at the current levels. In order to qualify for any particular regime, your business must meet two of the three criteria.
We’ve prepared a handy guide below that shows what the thresholds currently are, and what they become from 6 April.
| Before 6 April 2025 | |||
| Annual Turnover | Balance Sheet Total | Employees | |
| Micro | £632,000 | £316,000 | 10 |
| Small | £10.2 million | £5.1 million | 50 |
| Medium | £36 million | £18 million | 250 |
| After 6 April 2025 | |||
| Annual Turnover | Balance Sheet Total | Employees | |
| Micro | £1 million | £500,000 | 10 |
| Small | £15 million | £7.5 million | 50 |
| Medium | £54 million | £27 million | 250 |
The biggest change is for companies that move from being medium sized to small, who will no longer have to have a statutory audit of their accounts, or produce a strategic report.
In tandem with this, there are some changes to the Directors’ Report
The changes largely apply to Large and Medium sized businesses, and are intended to remove duplication, and those requirements superseded by other reporting requirements, as well as those which provide low-value disclosures.
If you thing you may be affected by this, please discuss with your accountant, to ensure that you still included everything that is required, without including the things that are no longer required.
Micro businesses are still exempt from the requirement to provide a Directors’ Report, for the time being – although there are further proposals due to come in as part of the previously identified Company Law changes being proposed that may include a change to this exemption.
What next?
Well, you should determine what your new reporting requirements will (and won’t) be. It’s always best to speak to your accountant about the possible impact of this. Remember – just because you can report less, doesn’t necessarily mean you should. Moving to a simpler reporting method might lead to problems with getting loans or mean you get less favourable credit terms – lenders don’t like vague numbers.
Confused or have questions? Get in touch with us to have a chat about what this might mean for you and your businesss(s).
