Starting from October 2024, the size thresholds for companies will increase by 50%. These new thresholds will apply to each company at the beginning of their next accounting period starting on or after 1 October 2024.
What does this mean for your company?
The Companies Act 2006 outlines the requirements for the accounts filed at Companies House, dividing them into four categories based on company size: micro-entity, small, medium-sized, and large.
A company is classified into one of these categories based on its turnover and balance sheet total. Generally, the larger the company, the more comprehensive the accounting requirements.
The current thresholds, which apply to accounting periods beginning on or after 1 January 2016, are as follows:
| Micro-entity | Small company | Medium company | Large company | |
| Annual turnover | No more than £632,000 | No more than £10.2m | No more than £36m | More than £36m |
| Balance sheet total | No more than £316,000 | No more than £5.1m | No more than £18m | More than £18m |
| Average no. of employees | No more than 10 | No more than 50 | No more than 250 | More than 250 |
If the Government goes ahead with the changes as expected, the new thresholds for accounting periods beginning on or after 1 October 2024 will be as follows:
| Micro-entity | Small company | Medium company | Large company | |
| Annual turnover | No more than £1m | No more than £15m | No more than £54m | More than £54m |
| Balance sheet total | No more than £500,000 | No more than £7.5m | No more than £27m | More than £27m |
| Average no. of employees | No more than 10 | No more than 50 | No more than 250 | More than 250 |
Companies House provides more detailed guidance here.
With the increase in thresholds, many businesses may move to a lower category.
Initially, this seems beneficial, as it reduces the reporting requirements. However, there may be reasons why a company might choose not to take advantage of this change.
For example, if a company is experiencing rapid growth, moving down a category might be a temporary shift. Since some reporting requirements involve ongoing processes, it could be disruptive to halt these processes only to restart them a year or so later.
If you have any concerns about how these changes might impact your company, please contact a member of the CB Reid team. We can help you determine the most appropriate category for your company.