UK Company Size Thresholds Increase
23/03/2024 - 4 minutes readUK Company size thresholds increase has been announced for financial years starting on or after 1 October 2024.
UK Company size thresholds increase will result in the Micro entity thresholds move from not more than £632,000 turnover to not more than £1m.
If the new measures are adopted, the thresholds will be increased as follows:
- – Micro entity thresholds: turnover to up to £1m, balance sheet to up to £500k.
- – Small thresholds: turnover to up to £15m, balance sheet to up to £7.5m.
- – Upper medium threshold: turnover up to no more than £54m, balance sheet up to no more than £27m.
The move will take around 132,000 businesses out of non-financial reporting requirements, according to the government, which also plans to remove requirements for what companies must set out in their annual reports and make it easier for companies to file their reports digitally.
Legislation is planned to be laid this summer to increase the size thresholds that determine the size of a company by 50% to cut complexity and burden from legislative reporting requirements.
The government intends to consult later this year on amending the definition of a medium-sized company for company reporting. The threshold on the maximum number of employees that classifies a medium-sized company would increase from 250 to 500. It will also consult on exempting medium-sized companies from producing a strategic report, and taking smaller public interest entities out of audit tendering and rotation requirements.
UK Company size thresholds increase will result in the following upper limits:
Current company size thresholds
| Two out of three | Micro | Small | Medium | Large |
|---|---|---|---|---|
| Annual turnover | Under £623k | Below £10.2m | Under £36m | £36m+ |
| Balance sheet total | Under £316k | Below £5.1m | Under £18m | £18m+ |
| Average no. of employees | 10 or fewer | 50 or fewer | 250 or fewer | 251+ |
Proposed company size thresholds
| Two out of three | Micro | Small | Medium | Large |
|---|---|---|---|---|
| Annual turnover | Under £1m | Below £15m | Under £54m | £54m+ |
| Balance sheet total | Under £500k | Below £7.5m | Under £27m | £27m+ |
| Average no. of employees | 10 or fewer | 50 or fewer | 250 or fewer | 251+ |
Changes to reporting requirements
The government intends to consult on changes to reporting requirements. Proposals include:
- – Removing overlapping requirements from directors’ reports and directors’ remuneration reports
- – Making it simpler for companies to provide digital reports
- – Exempting medium-sized companies from providing a strategic report
Separately, Small companies will have to file a profit and loss account with Companies House following the passing of the Economic Crime and Corporate Transparency Act in 2023.This change ensures that turnover is available on the public register at companies house.
The government will streamline the existing filing framework for small and micro-entity companies.
Rather than having the filing obligations for small companies and micro-entities within the same section of the Companies Act 2006, the Bill splits the requirements into two sections, which aims to make the filing requirements clearer for companies to understand.
Under the new rules, micro-entities will be required to prepare annual accounts in accordance with the requirements of section 396 (which requires the preparation of a profit and loss account), but the amendments retain the option for micro-entities to not prepare a directors’ report.
Similarly, the amendments to the small companies filing requirements require the preparation of annual accounts in accordance with section 396. However, a small company will be required to file its profit and loss account and directors’ report. This will ensure that key information such as turnover is available on the public register. The changes will also remove the option for companies to prepare abridged accounts.
These amendments will make the filing requirements easier to understand, reduce fraud and error, and improve transparency.
How can MCL Accountants help with your queries on the UK Company size thresholds increase?
Contact MCL Accountants on 01702 593 029 if you would like us to answer your queries on the UK Company size thresholds increase or if you need any assistance with the preparation and submission of your business accounts or self-assessment tax returns to HMRC.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.
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