Big Changes Coming: UK Company Size Thresholds Are Getting a Major Overhaul!

If you run a UK business, this is something you really need to know. From 6 April 2025, the size thresholds that define whether your company is micro, small, medium, or large are going up — by around 50%!

Why does this matter?

These thresholds determine your reporting obligations, including whether you need to submit detailed accounts or even have an audit. With the new rules, thousands of companies could benefit from simpler, cheaper reporting requirements.

🚨 What’s Changing?

In October 2024, the UK government confirmed plans to raise the monetary thresholds used to classify company size. This was followed by official legislation in December 2024.

It’s the first major update in years — and it's not just an inflationary tweak. The government wants to future-proof UK corporate reporting and keep the country competitive for business.

📊 New Size Thresholds (from 6 April 2025)

To qualify for a size category, a company must meet at least two out of three criteria:

⚠️ Non-monetary factors (like group structure or public interest status) can still affect your classification — so check carefully.

🧠 What Does This Mean for Your Business?

Under the Companies Act 2006, company size affects how much reporting you need to do. In general:

• Smaller = less reporting
  
  

• Larger = more compliance
  
  

With the new thresholds, many companies will “move down” a category and gain access to a lighter reporting regime.

Here’s what might shift:

• ✅ 113,000 companies could move from small to micro
  
  

• ✅ 14,000 companies might shift from medium to small — losing the audit requirement
  
  

• ✅ 6,000 companies could go from large to medium
  
  

💡 Reporting Options by Size

Micro-Entities (FRS 105)

• Minimal disclosures
  
  

• No cash flow statement or audit usually needed
  
  

• ⚠️ Limited information can affect credit ratings and investor confidence
  
  

Small Companies (FRS 102 Section 1A)

• Can omit cash flow statements (for now)
  
  

• Usually exempt from audit
  
  

• ⚠️ From 2026, more disclosures required under FRC changes
  
  

Medium-Sized Companies

• Fewer disclosures than large firms
  
  

• Exempt from energy and carbon reporting
  
  

• May benefit from cost savings — but weigh these against your future growth needs
  
  

⚠️ Risks to Watch Out For

While lighter reporting sounds great, it’s not always the right move:

• You might outgrow the lower regime quickly
  
  

• Switching back can disrupt internal systems
  
  

• Micro accounts (FRS 105) can be too limited for lenders and investors
  
  

🔭 Anything else?

Small and micro businesses will be required to submit their profit and loss accounts to Companies House.

✏️ Final Thoughts

These changes are a big step toward modernising UK corporate reporting and reducing red tape. But don’t jump too fast — take time to consider what regime is right for your business now and in the future.

Need help figuring out what this means for your company? Talk to your accountant or advisor soon — the clock is ticking!