UK company size thresholds are set to increase
8th April 2024
UK company size thresholds are set to increase, but what does this change for you?
In his recent economic speech on 18th March 2024, Rishi Sunak unveiled significant changes aimed at simplifying reporting requirements for businesses. Among these measures, he announced an increase in the thresholds used to determine company size.
Understanding Company Size Thresholds
Businesses in the UK are categorised into one of four sizes: micro, small, medium, and large, each with different reporting obligations. These classifications are based on criteria such as annual turnover, balance sheet total, and average number of employees.
Current and Proposed Thresholds
Currently, the thresholds for each category are as follows:
Current Thresholds
| Two out of three of the following: | Micro | Small | Medium | Large |
| Annual turnover not more than | £623k | £10.2m | £36m | £36m+ |
| Balance sheet total not more than | £316k | £5.1m | £18m | £18m+ |
| Average no. of employees not more than | 10 | 50 | 250 | 251+ |
Proposed Thresholds
| Two out of three of the following: | Micro | Small | Medium |
Large |
| Annual turnover not more than | £1m | £15m | £54m | £54m+ |
| Balance sheet total not more than | £500k | £7.5m | £27m | £27m+ |
| Average no. of employees not more than | 10 | 50 | 250 | 251+ |
The proposed changes represent a 50% uplift to the existing thresholds. The government estimates that approximately 132,000 businesses will benefit from reduced reporting requirements. This includes large companies being reclassified as medium-sized, medium-sized companies falling into the small category, and small companies reclassified as micro-entities.
Changes to Reporting Requirements
In addition to adjusting size thresholds, the government plans to consult on simplifying reporting requirements. Proposed measures include removing overlapping requirements from directors’ reports and simplifying digital reporting. The government also intends to consult on further amendments, such as increasing the maximum number of employees for medium-sized companies and providing exemptions for certain reporting obligations.
Effective Date and Further Proposals
It is anticipated that these changes will be applicable for financial years beginning on or after 1st October 2024.
What Should You Do?
If your company’s size classification is set to change as a result of these proposals, no immediate action is required. The proposed changes won’t come into force until after a government consultation, and your account manager at Whitings will advise you accordingly.
Stay tuned as further information is made available.
Get In Touch
For more information on reporting requirements for your company, contact your local Whitings office today.
Disclaimer - All information in this post was correct at time of writing.
