Hi

From 6 April 2025, the UK government is raising the size thresholds that define micro, small, and medium-sized companies by roughly 50%. 

This might sound a bit dull, but here's why it matters: your business could soon find itself officially classed as smaller and smaller businesses get to enjoy fewer audits, simpler reporting, and less paperwork overall. In short, less hassle for you.

Here's exactly what's changing:

Current thresholds (until 5 April 2025):

Micro: Turnover up to £632,000; Balance sheet up to £316,000; Employees up to 10

Small: Turnover up to £10.2 million; Balance sheet up to £5.1 million; Employees up to 50

Medium: Turnover up to £36 million; Balance sheet up to £18 million; Employees up to 250

New thresholds (from 6 April 2025):

Micro: Turnover up to £1 million; Balance sheet up to £500,000; Employees up to 10

Small: Turnover up to £15 million; Balance sheet up to £7.5 million; Employees up to 50

Medium: Turnover up to £54 million; Balance sheet up to £27 million; Employees up to 250

To work out where your business fits, you just need to meet two out of these three criteria. Employee limits aren't changing, but the financial thresholds are increasing significantly.

Why now? Simply put, inflation has changed the landscape since the thresholds were last updated in 2013. The government estimates around 113,000 small businesses will become micro, about 14,000 medium-sized businesses will shift to small, and roughly 6,000 large businesses will become medium-sized.

How will this actually affect you?

The main benefit: less paperwork. For instance:

• Medium businesses moving to small won't need statutory audits or strategic reports.
• Small businesses becoming micro won't have to produce a Directors’ Report.
• Medium-sized and large businesses will no longer need to report certain details like financial instruments, R&D, or employee and supplier engagement.

So, what should you do next?

Check your latest financial figures against these new thresholds. Have a quick chat with your accountant to confirm your business category from April 2025 and make sure you're clear on any changes to your reporting requirements.

One quick heads-up though—simpler reporting sounds great, but remember, banks and lenders often prefer detailed, audited accounts. Keep that in mind if you're looking to secure finance or loans.

The takeaway?  Figure out where you stand, explore opportunities that come with being classed as a smaller business, and make a plan. Is there a smarter way to take advantage of these changes? Now's the perfect time to find out.

Noel Guilford