Company reporting thresholds to rise

The Government has announced that the company corporate reporting thresholds are to increase.

The announcement is part of a package of measures by Government to ease the regulatory burden for businesses on reporting. The government’s intention is for the changes to take effect for accounting periods beginning on or after 1 October 2024.

If adopted, the new measures will see reporting thresholds for micro entities increase from a turnover of £632,000 to £1 million with the balance sheet total increasing to £500,000 (up from £316,000).

For small businesses, the turnover threshold will increase from £10.2 million to £15 million with the balance sheet total threshold increasing to £7.5 million (up from £5.1 million).

For medium-sized businesses, reporting thresholds will start at £54 million (from £36 million) with the balance sheet total increasing to £27 million (up from £18 million). Everything above this threshold will be considered a large company.

The changes are expected to see 5,000 large companies being reclassified as medium-sized businesses with more proportionate reporting and 13,000 medium-sized companies are expected to be reclassified as small businesses allowing them to benefit from potential audit exemption, a reduction in narrative corporate reporting and the option to file simpler financial statements.

The changes are expected to see up to 113,000 small companies be reclassified as micro entities allowing them to prepare simpler financial statements.

The Government will also consult on further changes later this year including a proposal to exempt medium-sized companies from producing Strategic Reports and the proposal may include changes to the Directors’ Report and the Directors’ Remuneration Report, removing obsolete or overlapping requirements.

Further changes to how businesses are classified by the number of employees may also change with the Government expected to launch a consultation later this year. This aims to increase medium-sized businesses threshold to 500 employees (up from 250).

Michael Cook, Head of Audit at Kreston Reeves said: “These changes are welcome as they remove some of the complexities, and cost, of the current reporting regime, especially for smaller entities.”

For more information on how these changes might affect your business, please get in touch.