Audit exemption limits set to rise

19th April 2024

What could the changes to Audit exemption limits mean for you?

The government has recently announced changes to company law that will see company size thresholds increased by 50%. This is hoped to reduce complexity and additional burden for companies. These changes are intended to be in place for year ends commencing on or after 1 October 2024.

Currently, small companies are those with less than £10.2m turnover, £5.1m gross assets and 50 employees. The changes will increase the monetary figures by 50% to £15m turnover, £7.5m gross assets, with 50 employees remaining static. Typically, a company is exempt from audit if it is classed as a small company*, which requires them to meet at least 2 of these 3 criteria.

At the small company thresholds above, this is expected to impact 13,000 medium-sized companies that will now be classified as small. These entities are likely to have the choice as to whether they obtain an audit on their financial statements, and may reduce the need for additional non-financial disclosures in their accounts.

*Please note there are other circumstances where an audit may be required for a small company. The most common that we come across are UK subsidiaries of large overseas groups, groups of companies where consolidated become larger, and where an audit is required by a third party stakeholder. There are many other exceptions and so any decision to step away from an audit should be discussed with a professional advisor.