New Company Size Thresholds
New Company Size Thresholds & Directors’ Report Changes from April 2025: What UK Businesses Need to Know
📈 New Company Size Thresholds & Directors’ Report Changes from April 2025: What UK Businesses Need to Know
From 6 April 2025, major changes to financial reporting requirements for UK businesses will take effect. The government has introduced new legislation — The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 — aimed at cutting red tape and reducing the reporting burden on companies of all sizes.
At Barnett & Co Accountants, we break down what these changes mean, who they affect, and how your business can benefit.
🔍 Why the Changes?
The legislation increases the monetary thresholds that define micro, small, and medium-sized entities under the Companies Act 2006. This move reflects the impact of inflation since 2013, and forms part of the government’s wider plan to simplify corporate reporting.
📊 New Company Size Thresholds from April 2025
Companies will qualify for a category (micro, small, medium) if they meet two of the three criteria listed below:
CategoryTurnoverBalance Sheet Total (Assets)EmployeesMicroWas: £632k → Now: £1mWas: £316k → Now: £500k10SmallWas: £10.2m → Now: £15mWas: £5.1m → Now: £7.5m50MediumWas: £36m → Now: £54mWas: £18m → Now: £27m250
These thresholds also apply to LLPs under corresponding changes to LLP regulations.
🧾 Who Benefits from the New Thresholds?
The government estimates that:
113,000 entities will move from small to micro
14,000 will shift from medium to small
6,000 will drop from large to medium
✅ Key Benefits by Size Reclassification:
Micro-entities:
No Directors’ Report
Simplified accounts filing
Small companies:
Audit exemption (subject to group considerations)
Exempt from Strategic Report
Less complex accounting requirements
Medium-sized companies:
Fewer Strategic Report requirements, such as exemption from the Section 172(1) statement
🔄 Transitional Provisions: Two-Year Rule Made Easier
Under normal rules, a company must meet size criteria for two consecutive years to qualify for reclassification. The 2024 legislation includes a transitional provision allowing businesses to treat the new thresholds as if they applied in the previous year — meaning you may be able to take advantage of the benefits immediately from 6 April 2025.
✂️ Simplification of the Directors’ Report
As part of the government’s deregulatory push, several non-financial reporting requirements will be scrapped for medium and large companies, including:
Financial instruments disclosure
Post-year-end events
Likely future developments
Research & development activity
Overseas branches
Employment of disabled persons (also removed for small entities)
Employee and stakeholder engagement
Supplier and customer engagement
These changes aim to streamline reporting and remove duplication from overlapping EU-origin rules.
🔜 What’s Next? Further Deregulation Ahead
A second round of changes — targeting the Directors’ Remuneration Report and audit regulatory issues — is expected in early 2025 through a separate legislative update.
💬 Expert Commentary
“We are pleased to see the government follow through with plans to increase company size thresholds and streamline reporting,” says Fahad Asgar, Technical Manager, ICAEW. “Removing duplicative reporting is an important step towards a more modern, proportionate corporate reporting system.”
📌 How Barnett & Co Can Help
At Barnett & Co Accountants, we’re here to help your business understand and apply the new rules with confidence. Whether you're unsure of your entity size, want to know if you're audit-exempt, or need help adjusting your reporting obligations—we can help you navigate the changes efficiently.
✅ Need help reclassifying your business size?
✅ Want to understand how these changes affect your 2025 filings?
📞 Contact us today or book a consultation with our expert team.
🛠️ Helpful Resources
📞 Let’s Talk
Want to ensure you're compliant and maximising the benefits of these changes?
📧 Email us at info@barnettandco.co.uk
📞 Call us on 0345 646 1516
🌐 www.barnettandco.co.uk
