UK Company size thresholds have changed

On 10 December 2024 the UK Government unveiled plans to raise the thresholds determining a company's size for financial reporting purposes. This move aims to streamline reporting for small to medium enterprises, potentially alleviating the regulatory complexities faced by local businesses and enabling them to refocus on their core activities.

The new thresholds are shown below:

New size thresholds for individual companies and LLPs:

In addition, the definition of a medium sized company in terms of employee numbers is now a maximum of 250.

For parent companies, the following group thresholds will apply:

There are no changes to the ineligibility criteria (such as a public company being prohibited from qualifying as a micro, small or medium company) included in sections 384B, 384 and 467 of the Companies Act 2006 for micro, small and medium entities respectively.

Companies will benefit from these changes for financial years commencing on or after 6 April 2025, however, entities may apply the size thresholds, in relation to both the current and previous financial years for their first set of financial statements beginning after 6 April 2025.

Changes to narrative reporting requirements

In addition to the changes to company size thresholds, some narrative reporting requirements have been removed, applying to periods beginning on or after 6 April 2025. From that date, there will be no requirement for entities with more than 250 employees to disclose their policies and procedures in respect of the recruitment, employment and career development of disabled persons.

There will also be no requirement for companies to include information around risks relating to financial instruments, research & development expenses, post balance sheet events and their engagement with employees, suppliers, customers and others. These disclosures have been removed to prevent duplication of information within the Strategic and Directors’ Reports.

In the case of Streamlined Energy & Carbon Reporting (SECR) disclosures, these are aligned to the current large size thresholds, meaning only companies qualifying as large under the existing thresholds are required to provide such information.

For many this will be a welcome development, helping reduce the complexity and burden from legislative reporting requirements for local businesses and allow more focus to be placed on their core operations.

It is crucial to recognize that the full implications of these regulatory adjustments must be carefully assessed for each individual business. While the increased thresholds may lighten regulatory burdens, they could also impact aspects such as transparency, accountability, and investor confidence.

For any inquiries or assistance in navigating these changes, the expert team at BDO NI stands ready to provide support and address your questions. Feel free to reach out to us without hesitation.