Audit thresholds to increase from April 2025
07 March 2025 • Audit
From 6 April 2025, UK company size audit thresholds will increase removing the requirement for many smaller companies to submit a statutory audit.
Under the new thresholds limited companies and LLPs will only require a statutory audit if they meet any two of the following three criteria:
- Turnover of £15 million+ (up from £10.2 million)
- Balance sheet assets of £7.5 million+ (up from £5.1 million)
- Average of 50+ employees (unchanged)
Company size thresholds have remained unchanged since 2013 and the increase aims to reduce reporting obligations for smaller companies, as well as account for inflation.
The Government estimates that 14,000 companies will move from the medium-sized to small category and will be exempt from supplying audited accounts to HMRC, subject to possible implications for companies that are part of a group.
The new regulations provide transitional arrangements, including the ‘two-year consecutive rule’ which allows companies to apply the new thresholds to the previous financial year once the law takes effect this April.
Audits are not just about compliance
Whether required for compliance or not, many businesses find they benefit from the audit process, be it to assure stakeholders or provide an independent review of systems or assets.
This can be particularly relevant if a business is a fast-growth smaller firm with ambitious plans that might require funding, or where there are plans to sell the business or float it on a stock exchange. Insights gained from an audit can also play a fundamental role in the successful ongoing management of any organisation.
To discuss how the increase in audit thresholds might impact your situation, or to explore the benefits of an audit, please get in touch with your usual Warrener Stewart contact or email us on info@warrenerstewart.com