If you have been keeping a close eye on your company’s growth, you know that hitting certain financial milestones can be a double-edged sword. While higher turnover is a marker of success, it often pulls you into a world of complex reporting, mandatory audits, and increased administrative pressure.
However, as we move through 2026, many UK businesses are finding themselves reclassified into "smaller" categories—even if their revenue is growing. Thanks to the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024, thresholds have shifted significantly to account for inflation and reduce the "red tape" burden on mid-sized firms.
At CoreAcc Accountants, we are helping our clients navigate these shifts to ensure they aren't paying for audits or reports they no longer legally require.
The Big Shift: What are the New Numbers?
For financial years beginning on or after 6 April 2025, the monetary thresholds for turnover and balance sheet totals increased by approximately 50%. This update has moved thousands of companies into less regulated brackets.
To qualify for a specific size category, a company must meet at least two out of the three following criteria:
Strategic Note: If your business exceeds the "Medium" limits, it is classified as Large.
Key Benefits for Medium and Large Businesses
If your business was sitting on the edge of the "Large" or "Medium" categories, these changes are a game-changer for your compliance strategy.
1. Expanded Audit Exemptions
The most significant impact is on the statutory audit. Since the audit exemption threshold is tied to the "Small" company limits, companies with a turnover between £10.2m and £15m may now find they can legally scrap the annual audit.
2. Simplified Reporting (The "Small Companies Regime")
Medium-sized companies that are reclassified as "Small" can adopt FRS 102 Section 1A. Benefits include:
- No Strategic Report: You no longer need to analyze business risks and KPIs in a formal report.
- Reduced Disclosures: You can omit detailed notes regarding complex financial instruments.
- Streamlined Directors' Report: Many "low-value" disclosures, such as details on overseas branches, are no longer required.
3. Transition and the "Two-Year Rule"
Normally, you must meet the criteria for two consecutive years to change size. However, a transitional provision allows you to "look back" at your previous year's figures as if these new thresholds were already in place.
A Note on the Filing Future (ECCTA 2023)
While the Economic Crime and Corporate Transparency Act (ECCTA) originally planned to mandate full Profit & Loss filing for everyone, the government has paused these reforms as of early 2026. For now, the "filleted" filing option remains available for small companies, though the long-term trend is still toward higher transparency.
How CoreAcc Accountants Can Help
Deciding how to report your figures is a major strategic decision. Our team is here to ensure you stay compliant while taking full advantage of the new, lighter regulations. We provide:
- Company Size Audits: We’ll review your data against the new thresholds to see if you qualify for an audit exemption right now.
- Reporting Strategy: We advise on whether moving to the "Small Companies Regime" (FRS 102 Section 1A) fits your long-term goals.
- Filing Compliance: As Companies House updates its roadmap, we ensure your accounts are submitted in the correct format every time.
Get in touch with CoreAcc Accountants today to see if your business is eligible for reduced reporting.
