New Size Rules for UK Companies

Applicable to companies set up under the Companies Act 2006 and limited liability partnerships (LLPs), the updated rules raise the thresholds for what counts as a micro, small or medium-sized company.

This means more businesses may benefit from simpler reporting requirements and some of the information typically included in the Directors’ Report will no longer be required. 

For individual companies: 

For parent companies: 

The new size thresholds apply for accounting periods starting on or after 6 April 2025. You can use them for both the current and previous year, but only if your first set of accounts starts after that date. 

This means if your year-end is 30 June, you can’t use the new thresholds for the year ending 30 June 2025 (since it started before 6 April). But you can use them from the year ending 30 June 2026 and then apply them to the prior year to check if you meet the “two-year” rule. 

The government expects the changes to affect a lot of businesses, with roughly: 

• 113,000 companies and LLPs eligible to move from small to micro 

• 14,000 eligible to move from medium to small 

• 6,000 eligible to move from large to medium 

Moving down a size category means less reporting and fewer audit requirements. Some key changes include: 

• Small entities may no longer need a statutory audit or Strategic Report (depending on group structure) 

• Micro entities are now exempt from preparing a Directors’ Report 

• Medium-sized entities can skip certain parts of the Strategic Report, including the section 172(1) statement