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UK Company Size Thresholds to See Significant Changes by October 2024


UK Company Size Thresholds to See Significant Changes by October 2024

The UK government is set to implement deregulatory measures aimed at streamlining financial reporting for small to medium enterprises (SMEs), with a notable increase in company size thresholds. This move is poised to have a substantial impact on businesses across various sectors.

Announced on 18th March 2024, the government’s initial regulatory adjustments aim to alleviate the administrative burdens placed on businesses, particularly concerning non-financial reporting requirements.

The forthcoming legislation, expected to be introduced later this year, will raise the company size thresholds by 50%, simplifying regulatory compliance and reducing reporting complexities.


What This Means for Business Owners


  1. Operational Adjustments: Approximately 5,000 large companies are projected to be reclassified as medium-sized entities under the revised thresholds. This reclassification will likely necessitate operational adjustments, potentially affecting resource allocation and internal processes to align with the new regulatory framework.
  2. Tax Implications: With around 13,000 medium-sized companies expected to fall within the small companies’ regime, businesses could benefit from potential audit exemptions and streamlined financial reporting. This could lead to significant tax implications, affecting financial planning strategies and reporting practices for affected businesses.
  3. Financial Planning: Around 113,000 small companies are anticipated to transition into the micro-entities’ regime, allowing for simplified accounting procedures. While this may streamline financial reporting for these businesses, it also prompts a reassessment of financial planning strategies to accommodate the altered reporting requirements.

Moreover, small companies and micro-entities should anticipate forthcoming changes in their filing obligations as part of the Economic Crime and Corporate Transparency Act 2023.


Proposed Size Thresholds


If enacted, the revised thresholds will see significant adjustments, as outlined below:

  • Large Company: Turnover exceeding £40 million, balance sheet total exceeding £20 million, and over 500 employees.
  • Medium-sized Company: Turnover between £10.2 million and £40 million, balance sheet total between £5.1 million and £20 million, and 50 to 500 employees.
  • Small Company: Turnover not exceeding £10.2 million, balance sheet total not exceeding £5.1 million, and fewer than 50 employees.
  • Micro-entity: Turnover not exceeding £632,000, balance sheet total not exceeding £316,000, and fewer than 10 employees.


Further Regulatory Proposals


In addition to the threshold revisions, the government plans to eliminate redundant requirements from Directors’ and Directors’ Remuneration Reports, facilitating digital annual report issuance. Technical enhancements to the audit regulatory framework are also on the agenda.

The government intends to initiate consultations in late 2024 regarding the definition of a medium-sized company, including potential adjustments to the maximum employee count for classification. Exemptions from strategic report inclusion and audit tendering and rotation requirements for smaller public interest entities will also be explored.


Effective Date


Businesses are expected to benefit from these regulatory changes for financial years commencing on or after 1st October 2024. Detailed guidance on implementation and compliance will be provided in due course.

For further business advice, contact Voscap today on 020 7769 6831, or email help@voscap.co.uk. You can also refer to our Latest News, where we provide frequent articles and resources aimed at supporting UK business owners.

About Voscap Ltd

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