From April 6, the size thresholds for UK companies are increasing by about 50%. These thresholds help determine whether a company is classed as small, medium, or large. Changes apply to companies under the Companies Act 2006, including limited liability partnerships (LLPs) and qualifying limited partnerships. For business owners and their finance teams, this could mean more straightforward reporting requirements and cost savings, but it’s essential to understand how the changes work.
The new thresholds will apply to financial periods starting on or after April 6. Companies can also apply them to the previous year when preparing their first set of accounts under the new rules. For example, if a business has a year-end of June 30, it can’t use the new thresholds for its accounts ending June 30, as the period began before April 6. However, it can use them for its accounts ending June 30 2026, and apply them retrospectively to the previous year. Meeting the size criteria for two years in a row is key to qualifying under a new category.
From April 6 2025, the size thresholds for UK companies are increasing by about 50%. Credit: Getty Images (Stock image)
These changes will allow more businesses to benefit from reduced financial reporting obligations. Smaller companies enjoy simpler disclosure requirements under the small or micro company regimes, and many will also qualify for exemptions from audits and consolidation requirements. It is estimated that 113,000 businesses will move from small to micro, 14,000 from medium to small, and 6,000 from large to medium, which could mean lower administrative burdens and compliance costs for many.
Alongside the threshold changes, some reporting requirements are being removed for periods starting on or after April 5. For example, businesses with over 250 employees will no longer need to disclose policies on recruiting or supporting disabled staff. Similarly, information about financial instrument risks, research and development spending, post-balance sheet events, and engagement with employees and suppliers will no longer need to be included. These changes aim to reduce duplication, as such information is often already covered elsewhere in reports, like the Strategic Report business review.
However, some obligations remain. Streamlined Energy and Carbon Reporting (SECR) disclosures will still apply to companies classed as large under the current thresholds. This means that businesses moving down to a lower category might still need to include these disclosures if they were previously large.
Overall, the focus is also shifting towards more tailored reporting. Businesses are required to provide clear, specific information in their Business Review and Principal Risks and Uncertainties sections. This should include details about the company’s activities, financial position, future plans, and any risks or opportunities it faces. Standard or generic statements won’t meet the expectations of regulators or stakeholders.
For small business owners and accountants, these updates offer a chance to streamline processes and cut costs. However, it’s just as crucial to stay on top of the new requirements, especially where reports must showcase the unique story of each business. Understanding these changes now will make businesses more equipped to adapt with ease and maximise the benefits of the new rules when they come into effect.
Clare Thomson is a director at Grant Thornton.