Increase to small company thresholds

Thresholds based on a company’s accounts and employee numbers determine whether a company is categorised as small or not.

Being able to qualify as a small or medium sized business can cut red tape for a business with the reduced amount of both non-financial and financial reporting a small or medium sized business is required to do.

The Prime Minister, Rishi Sunak, has announced that there will be 50% uplift to the current thresholds that determine a company’s size. The government expects that this will benefit up to 132,000 businesses.

The current thresholds were set by the EU, who recently uplifted its thresholds by 25%. However, following Brexit, the UK has greater freedom to set its own thresholds and so is opting for a larger increase.

It is intended that the new thresholds will apply to financial years that start on or after 1 October 2024.

The new thresholds mean that a company with less than £632,000 turnover will now qualify as a micro-entity. A small company will be one with turnover less than £15m, and the upper medium threshold will increase to £54m. Companies with a turnover above £54m will be classified as large.

If you want to know how these changes might affect your company, please call us and we will be happy to help you.

See:Prime Minister to announce major reform package to boost apprenticeships and cut red tape for thousands of small businesses - GOV.UK (www.gov.uk)

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