Company Accounts Thresholds Increasing by 50% from April 2025: What It Means for You
The government has announced a significant change to company accounting thresholds, increasing them by 50% from April 2025. This move is designed to reduce the reporting burden on businesses and account for inflation since the last update in 2013. With these higher thresholds, many businesses will see reduced compliance requirements, including exemptions from audits and certain reporting obligations.
New Company Size Thresholds (Effective from 6 April 2025)
A company qualifies for a size category if it meets at least two of the three criteria listed below:
| Company Size | Turnover (≤) | Balance Sheet Total (≤) | Average Number of Employees (≤) |
|---|---|---|---|
| Micro | £1 million | £500,000 | 10 |
| Small | £15 million | £7.5 million | 50 |
| Medium | £54 million | £27 million | 250 |
These changes also apply to limited liability partnerships (LLPs), bringing them in line with the new company thresholds.
Who Benefits from These Changes?
- Micro-Entities: Around 113,000 companies and LLPs will now qualify as micro-entities, meaning they can take advantage of simpler accounting requirements and will no longer need to produce a Directors’ Report.
- Small Entities: An estimated 14,000 businesses will move from medium-sized to small, making them exempt from statutory audits (where applicable) and the need to prepare a Strategic Report.
- Medium-Sized Businesses: Approximately 6,000 companies will shift from large to medium status, reducing their reporting obligations, including exemptions from certain elements of the Strategic Report.
Transitional Provisions – Immediate Relief for Businesses
To help businesses transition smoothly, companies and LLPs can apply the new thresholds as if they had already been in place for their previous financial year. This means they can benefit from the increased thresholds straight away without waiting to meet the criteria over two consecutive years.
Directors’ Report Changes – Less Red Tape
Alongside these threshold increases, new regulations will simplify the Directors’ Report for large and medium-sized businesses by removing the need to report on:
- Financial instruments
- Important events since the financial year-end
- Likely future developments
- Research and development (R&D) activities
- Branches outside the UK
- Employment of disabled persons
- Engagement with employees, customers, and suppliers
These adjustments aim to cut down on unnecessary admin while still maintaining transparency where it matters.
What Should Businesses Do Now?
With these changes coming into effect from 6 April 2025, businesses should start reviewing their financial structures and compliance requirements now. If your company is shifting to a lower reporting category, it could mean significant savings on audit and compliance costs.
Want to make sure you’re making the most of these changes? Get in touch with us today to see how Riverview Portfolio can help you navigate the new thresholds and streamline your accounting processes.
