Thresholds for small and Medium-sized Companies and Groups and audit exemption threshold
A company (or group) qualifies as a small or medium-sized company (or group) if it meets two out of three criteria relating to turnover, balance sheet total and number of employees as set out below in its first financial year, or in the case of a subsequent year, in that year and the preceding year.
New thresholds have been put in place which apply for financial years beginning on or after 6 April 2008, by the Companies Act 2006 (Amendment) (Accounts and Reports) Regulations 2008 (SI 2008/393). These regulations can be found at: http://www.opsi.gov.uk/si/si200803
The existing thresholds and the new thresholds are set out in the table below.
| Existing Thresholds | No change | New Thresholds | ||
| Turnover (not more than) | Balance sheet total (not more than) | Number of employees (not more than) | Turnover (not more than) | Balance sheet total (not more than) |
Small company | £5.6 million | £2.8 million | 50 | £6.5 million | £3.26 million |
Small Group | £5.6 million net (or £6.72 million gross) | £2.8 million net (or £3.36 million gross) | 50 | £6.5 million net (or £7.8 million gross) | £3.26 million net (or £3.9 million gross) |
Medium-sized company | £22.8 million | £11.4 million | 250 | £25.9 million | £12.9 million |
Medium-sized Group | £22.8 million net (or £27.36 million gross) | £11.4 million net (or £13.68 million gross) | 250 | £25.9million net (or £31.1million gross) | £ 12.9 million net (or £15.5 million gross) |
Audit Exemption Threshold
The audit exemption conditions are met if a company meets both of the criteria for small companies relating to turnover and balance sheet total, as set out in the table above, in its first financial year, or in the case of a subsequent year, in that year and the preceding year.
Protection for Shareholders
Although companies that meet the requirements are able to take advantage of exemption from the independent statutory audit there are safeguards in company law to protect the interests of external shareholders. Section 476 of the Companies Act 2006 allows shareholders holding at least 10% of the share capital of a company to require an audit of the accounts.
Regulatory Impact Assessments
The Impact Assessment covering the latest increase to the thresholds can be found at http://www.opsi.gov.uk/si/si200803
To obtain copies of the RIA on the last increase to the small and medium-sized company thresholds please see the link below:
Final regulatory impact assessment on the thresholds defining small and medium sized companies
and for the RIA on the last increase to the audit exemption thresholds please see below
Final regulatory impact assessment on the audit exemption threshold
the financial year) to do so if they wish.
Regulatory Impact Assessments
The Impact Assessment covering the latest increase to the thresholds can be found at http://www.opsi.gov.uk/si/si200803
To obtain copies of the RIA on the last increase to the small and medium-sized company thresholds please click below,
(230KB)