To cut complexity and burdens from legislative reporting requirements, the thresholds for company sizes in the UK are being increased by 50%.
Following the Spring Budget, it has been announced by the Prime Minister Rishi Sunak that the company size thresholds will be changing in order to relieve the UK’s regulatory burden.
The Government intends for companies with financial years starting on or after 1 October 2024 to benefit from the changes being made to the thresholds. The ICAEW provided their own input into the consultation process with the clear message to ministers that the thresholds should become more simplified.
Company size thresholds UK
The new measures will mean micro entity thresholds will increase to turnover of not more than £1m, as compared to not more than £632,000 previously. Small company thresholds will now become £15m of turnover as opposed to £10.2m and the upper medium threshold will now be no more than £54m of turnover. Anything above this level will now be classed as a large company. The balance sheet total assets threshold will rise to £500,000 (micro), £7.5m (small), £27m (medium) and anything exceeding £27m (large).
The company size thresholds increasing is a step closer towards modernising the model for UK corporate reporting. The Government intends for 132,000 businesses to be taken out of non-financial reporting requirements. The measures also plan to simplify the process for filing reports digitally and to remove certain requirements relating to what companies are required to disclose in their annual reports.
Medium sized companies
The Government intends to look at the definition for medium sized companies and how this impacts on the required reporting.
There is a proposal to increase the medium sized companies average number of employees limit to 500 from 250. Medium companies may also become exempt from the requirement to prepare a strategic report. Furthermore, smaller public interest entities may be removed from their audit tender and rotation requirements.
Fully funded apprenticeships
The Prime minister also announced in his speech that the government intends to fully fund apprenticeships for small businesses from 1 April for trainees under the age of 21. The government will also increase the amount of funding that can be passed on to other businesses from employers that are paying the apprenticeship levy. Apprenticeships can currently be funded by a levy-paying employer transferring up to 25% of their unused levy to a different employer.
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