Small company thresholds expected to increase

The Prime Minister has announced plans to increase the financial thresholds which apply when determining whether a company is “micro”, “small”, “medium” or “large”.

The current and proposed future thresholds for small companies are as follows:

For a company to qualify as small, it must not exceed any two of these three thresholds.

A small company benefits from various accounting exemptions and concessions which are not available to larger companies. These concessions result in a reduction in the time and costs required for compliance with accounting and taxation requirements. Any increase in the thresholds will extend the availability of the concessions to more companies which will in turn ease the regulatory burden on a larger number of businesses.

Exemption from the requirement to have accounts audited is, in most instances, directly linked to the size of a company: if a company qualifies as “micro” or “small”, it is likely to be exempt from the requirement for an audit. We would hope that this link between company size and audit exemption would continue to apply, again extending the savings in time and costs.

The intention is that the revised limits will apply for accounting periods commencing on or after 1 October 2024.

The proposed changes for “micro” and “medium” companies are shown below. A large company is one which exceeds more than 2 of the medium company thresholds.

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