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The monetary thresholds that determine company size are being raised by 50% and are expected to take effect for financial years starting on or after 1st October 2024.

The changes are part of a wider package of proposals aimed at cutting both complexity and the burden of legislative reporting requirements and would have implications for both disclosure and audit requirements.

If the new measures are adopted the changes to the upper limits are shown below:

Turnover (£)Gross Assets (£)Turnover (£)Gross Assets (£)
Micro Entity632,000316,0001.0m500,000
Small entity10.2m5.1m15m7.5m
Medium entity36.0m18.0m54.0m27.0m

There is a third criteria used in determining the size of such entities and this is employee numbers. Currently the upper threshold for small entities is 50 employees whilst the upper threshold for medium entities is 250 employees. An entity must satisfy any two out of three of these criteria for two consecutive years in order to qualify.

A government consultation later this year will focus on amending the definition of a medium-sized company for company reporting. Under the proposals, the threshold on the maximum number of employees that classifies a medium-sized company would increase from 250 to 500.  We are not currently aware of any such consultation on the small threshold.

It also plans to simplify the requirements for what companies must set out in their annual reports and make it easier for companies to file their reports digitally.

There will also be consultation on exempting medium-sized companies from producing a strategic report.

The consultation will also look at taking smaller public interest entities out of audit tendering and rotation requirements.

According to the government, 132,000 businesses are expected to come out of non-financial reporting requirements under the changes,

We will of course keep you updated as we learn more about these changes.

McBrides Chartered Accountants