Cookies are small text files that are stored on your computer when you visit a website. They are mainly used as a way of improving the website functionalities or to provide more advanced statistical data.
Financial reporting: major changes for business sizes take effect
Newsletter issue – May 2025
Significant changes affecting financial reporting have kicked in, meaning many businesses may be re-classified in terms of their sizes.
The thresholds to determine whether a company is counted as 'micro, small or medium' changed on 6 April for the first time in 12 years. The Government announced the changed in December 2024.
The figures on the potential impact of the changes released by the Government, indicated around 6,000 businesses would go from 'large' to 'medium' under the changes. Around 113,000 businesses and LLPs will shift from small to micro and about 14,000 would drop from medium to small.
The published legislation memorandum states: 'The legislation reduces reporting burdens on companies. It does this by:
'Increasing by approximately 50% the turnover and balance sheet criteria that help determine whether a company is a micro-entity or small, or medium-sized, or large for the purpose of reporting and audit requirements under the Companies Act 2006, which will see many companies benefit from lighter touch financial and non-financial reporting requirements.'
The new thresholds officially apply to accounting periods beginning on or after 6 April 2025. So, for example, if your financial year begins on 1 July and ends on 30 June, the first period you'll be required to apply the new thresholds will be for the year ending 30 June 2026. So, for your 30 June 2025 accounts, the old thresholds still apply. Although there's also a transitional provision that could be applied. Here's what the thresholds look like for before and since April 2025:
Micro-entity:
Before 6 April 2025: turnover of £632,000 or less
From 6 April 2025: turnover of £1 million or less
Small company:
Before 6 April 2025: turnover of £10.2 million or less
From 6 April 2025: turnover of £15 million or less
Medium-sized company:
Before 6 April 2025: turnover of £36 million or less
From 6 April 2025: turnover of £54 million or less
Large company:
Before 6 April 2025: turnover over £36 million
From 6 April 2025: turnover over £54 million
For some businesses, the change might mean they drop to the lower category, which may mean they are no longer required to undergo a statutory audit. Ultimately the reforms are meant to help reduce the compliance burden on smaller businesses.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
Please complete our form
to request a callback
Competitive fixed quotes
for agreed services
Increase your profit and
reduce tax liabilities
Expert advice for your
business size
