Increase to small company thresholds

Thresholds based on a company’s accounts and employee numbers determine whether a company is categorised as small or not. Being able to qualify as a small or medium sized business can reduce the red tape a business must contend with, so any change in these thresholds can have a major impact on reporting requirements.

Prime Minister Rishi Sunak recently announced that there will be a 50% increase in the current thresholds that determine a company’s size. The Government expects this to benefit up to 132,000 businesses, saving around £150million per year.

The current thresholds were set by the EU, who recently increased its own thresholds by 25%. However, following Brexit, the UK has greater freedom to set its own thresholds and so is opting for a larger increase.

• The new thresholds mean that a company with turnover less than £632,000 will now qualify as a micro-entity. 
• A small company’s turnover will exceed £632,000 but be less than £15 million.
• A medium company’s turnover will exceed the £15 million limit for a small company, but be less than £54 million. 
• Companies with a turnover beyond £54 million will be classified as large.

These new thresholds will apply to financial years that start on or after 1st October 2024.

Realistically, these changes aren’t going to make a huge difference to many of our clients, but we strongly support the goal of reducing red tape and legislation for any and all businesses, and this is purportedly a step in that process. If you’d like to if these changes affect your company, please get in touch and we’ll explain more!