2024 Audit Threshold Changes

1 month, 3 weeks ago by Oliver Atkinson

The UK Government has introduced revisions to the turnover and balance sheet size thresholds used to define micro, small, medium, and large entities under the Companies Act 2006.

While employee size limits will remain unchanged for now, the turnover and asset thresholds will see a significant 50% increase, making more businesses eligible for the simplifications and exemptions that come with being classified as a micro, small, or medium-sized entity.

New Size Limits:

The government intends that companies will be able to benefit from these changes for financial
years commencing on or after 1 October 2024.

The revised thresholds will apply as follows:

Micro-entities:
o Turnover up to £1 million (previously £632,000)
o Gross assets up to £500,000 (previously £316,000)
o Cap of 10 employees (no change).

Small companies:
o Turnover up to £15 million (previously £10.2 million)
o Gross assets up to £7.5 million (previously £5.1 million)
o Cap of 50 employees (no change)

Medium-sized companies:
o Turnover up to £54 million (previously £36 million)
o Gross assets up to £27 million (previously £18 million)
o Cap of 250 employees (no change)

To be classified in a particular size category, a company must meet two out of three of the revised criteria—turnover, gross assets, or number of employees—over two consecutive years.

As a result, fewer companies will be classified as Medium-sized and will be exempt from Audit.

The changes to company size thresholds represent just one part of a wider regulatory reform aimed at improving non-financial reporting, such as removing requirements from the Directors’ Report and increasing the medium-sized employee limit to 500.

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