Big Changes to UK Company Size Thresholds for Accounting Periods commencing April 2025

What businesses need to know about the new reporting landscape

From 6 April 2025, the UK government is implementing one of the most substantial updates to company size thresholds in over a decade. These changes will affect how companies classify themselves (micro, small, medium, or large) and, in turn, what reporting, audit, and accounting standards they need to follow. The aim? To reduce administrative burden, simplify financial reporting requirements, and reflect the inflationary changes since the thresholds were last set in 2013.

Below, we break down what’s changing, why it matters, and how companies can prepare.

When Do the New Thresholds Apply?

The updated thresholds apply to financial years beginning on or after 6 April 2025. For most businesses, the first full year affected will be the year ending 30 April 2026.

Typically, a company must meet size criteria for two consecutive years to change category. However, a transitional provision in the new regulations allows companies to pretend as if the new thresholds were applicable in the previous year, meaning that many can benefit from the uplift immediately.

What Exactly Is Changing?

Only the monetary thresholds are increasing. Employee number limits remain the same.

Here’s a simple comparison of the old vs. new limits:

Company Size Thresholds
(Two out of three criteria must be met)

These increases—around 50% in most categories—largely reflect the effect of inflation since 2013.

Why the Change?

The government aims to:

• Reduce reporting burdens for smaller businesses
• Remove many companies from mandatory audit requirements
• Simplify financial reporting, especially for micro‑entities
• Modernise thresholds to reflect economic changes

An estimated 113,000 companies will move from small to micro, 14,000 from medium to small, and 6,000 from large to medium.

What Should Companies Do Now?

1. Reassess your size classification

Run your latest financials against the new thresholds.

2. Consider early planning for reduced reporting

If you’ll move into micro or small, you may be able to simplify:

• Accounting standards
• Disclosures
• Audit requirements
• Consolidation obligations (for small groups)

Final Thoughts

The April 2025 threshold changes represent a major shift in UK corporate reporting. For many companies, this is a welcome reduction in administrative burden and compliance cost. But it’s also a moment to reassess your reporting strategy, group structure, and future accounting needs.

If you’d like assistance with this, Alexander Myerson can help you:

• Analyse your company’s likely classification under the new rules
• Prepare a detailed action plan outlining your optimal reporting strategy