From April 2025, changes to company size classifications will make financial reporting simpler for thousands of businesses. The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 updates the the turnover and Balance Sheet limits that define company size thresholds.
These thresholds have remained unchanged since 2013 and the increase aims to reflect inflation and reduce the complexity of financial reporting.
New Company Size Thresholds
Starting from 6th April 2025, the following thresholds will apply when determining a company’s size. A company falls into a category if it meets at least 2 of the 3 criteria:
| Company Size | Turnover (max) | Balance Sheet Total (max) | Employees (max) |
| Micro | £1,000,000 | £500,000 | 10 |
| Small | £15,000,000 | £7.500,000 | 50 |
| Medium | £54,000,000 | £27,000,000 | 250 |
These thresholds apply to both Limited Companies and Limited Liability Partnerships (LLPs). Businesses that qualify under these new limits will face fewer administrative and financial reporting requirements.
What These Changes Mean for Businesses
The changes to the company size thresholds will allow many businesses to move into a lower category, therefore reducing their reporting obligations. The UK Government estimates that:
- 113,000 companies and LLPs will move from Small to Micro
- 14,000 companies will move from Medium to Small
- 6,000 large businesses will become Medium-sized
For businesses shifting from Medium to Small, the biggest benefit is the removal of the Statutory Audit Requirement. They will also no longer need to submit a strategic report, making their accounting process simpler. Similarly, companies moving from Small to Micro will no longer be required to provide a Directors’ Report.
Further Increases in April 2025
In the further move to ease financial reporting, the UK Government has announced that the increased company size thresholds will be reaffirmed and made effective from 6th April 2025. These new thresholds will apply for financial years beginning on or after this date.
Additionally, the requirement to meet 2 of the 3 criteria for 2 consecutive years will remain in place, except in the first period where a company can qualify immediately.
Changes to the Directors’ Report Requirements
Large and Medium-sized businesses will see a further reduction in reporting requirements from April 2025. You no longer need to include the following details in the Directors’ Report:
- Financial instruments
- Important events occurring after the financial year-end
- Future business developments
- Research and development activities
- Overseas branches
- Employment of disabled individuals (also removed for small businesses)
- Engagement with employees
- Engagement with customers and suppliers
These changes align with efforts to remove duplication, as much of this information is already covered in the Strategic Report for larger entities.
Benefits for Larger Companies
Businesses that shift from Large to Medium-sized will see reduced reporting obligations. They will no longer need to provide a Section 172(1) statement, which outlines how directors consider stakeholder interests. Additionally, they will no longer have to include details on:
- Financial instruments
- Significant events after the financial year-end
- Future business developments
- Research and development activities
- Overseas branches
- Employment of disabled individuals
- Engagement with employees, customers and suppliers
Transitional Provisions for Businesses
A transitional rule allows companies to benefit from the new thresholds sooner. When determining size for a financial year beginning on or after 6th April 2025, businesses can assume the new thresholds were already in place for the previous year.
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