April 2025 – Changes to Company accounts thresholds

April 2025 – Changes to Company accounts thresholds

The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 have now been passed into legislation, which are designed to reduce reporting burdens on companies and address stakeholder concerns. The effective date is 6 April 2025 with transition measures to allow companies to compare prior years on the same basis.

The thresholds which have not been changed for over a decade and were considered outdated, having not taken into account inflationary factors, as well as creeping legislation due to various EU directives.

The government estimates that this will save companies an estimated £240.2m in annual costs by reducing the reporting burden. It will see around 113,000 companies and LLPs moving from the small to micro-entity category, 14,000 moving from medium-sized to small and 6,000 moving from large to medium-sized.

The changes follow a Department for Business and Trade consultation on reporting, where the majority of respondents (59%) said that current reporting thresholds for business were no longer appropriate as they had not been updated for a number of years; and had a disproportionately negative impact on smaller companies.

Respondents also suggested that the directors’ report should be streamlined to remove duplication, with some suggesting it no longer served a relevant purpose.

So, what are the new thresholds?

• Micro entities and micro-entity LLPs: not more than £1m turnover; not more than £500,000 balance sheet total.
• Small companies and LLPs: not more than £15m turnover; not more than £7.5m balance sheet total.
• Small company groups and LLP groups: not more than £15m net (or £18m gross) turnover; not more than £7.5m net (or £9m gross) balance sheet total.
• Medium-sized companies and LLPs: not more than £54m turnover; not more than £27m balance sheet total.
• Medium-sized company groups and LLP groups: not more than £50m net (or £64m gross) turnover; not more than £25m net (or £32m gross) balance sheet total.
• Large companies and LLPs: any company that exceeds at least two of the medium-sized company criteria.
• Large company groups and LLP groups: any group that exceeds at least two of the medium-sized group criteria.

In order to bring in these changes swiftly, the transitional provision allows reporters to decide a particular company size by reference to a previous financial year, so that the amendments made by these regulations are treated as having applied in those previous years.

This is so companies and LLPs can benefit from the new thresholds as soon as possible after the legislation comes into force.