Companies Size Thresholds

In March 2024, the government announced plans to simplify reporting requirements for micro, small and medium entities. This change will likely result in the reclassification of 5,000 large companies as medium, 13,000 medium companies as small and 113,000 small companies as micro.  

These plans, which the government intends to implement for accounting periods starting on or after 1 October 2024, will see a significant rise, approximately 50%, in the monetary thresholds used to determine company size. 

Currently, there is no proposal to change the basis of size qualification, which is determined by meeting two out of the three stated thresholds. While the number of employees has not changed, the government has proposed amending the employee numbers for medium-sized companies from the current 250 to a new threshold of 500.

This move, aimed at relaxing and streamlining of the reporting requirements for many businesses will lead to the removal of what the government state are ‘low-value and duplicative information’ from the accounts, making them shorter and more focused. This will also enable those companies moving from medium to small to benefit from exemption from statutory audit.

Overall, these changes seek to modernise the reporting in the UK and help facilitate the issuance of digital sets of accounts by companies. This is in line with the Companies House reform, which is looking to introduce mandatory filing by accounting software of all company accounts by 2026.