Proposed company size classification changes would see 113,000 small firms redefined as micro businesses

Proposed company size classification changes would see 113,000 small firms redefined as micro businesses
Dan Martin
Dan MartinDan Martin Content & Events

Posted: Mon 15th Apr 2024

The government has confirmed its proposed increases to company size thresholds as part of efforts to reduce regulatory burdens on businesses.

First announced by prime minister Rishi Sunak on 18 March, small business minister Kevin Hollinrake revealed the full details in a written statement to Parliament.

He said that the proposals, which lift the monetary thresholds that determine company size by 50%, are aimed at making "the non-financial reporting framework smarter, simpler and better for business", with the "focus on reducing regulation on small and medium-sized companies, ensuring that reporting requirements are proportionate".

The changes would mean 5,000 large companies reclassified as medium, 13,000 medium-sized companies reclassified as small companies and becoming exempt to statutory audit requirements as well as being given the ability to file simpler accounts; and 113,000 small firms reclassified as micro-sized allowing them to submit simpler accounts.

The full proposals are in the table below. To be classified for each threshold, businesses must meet two of the three criteria:

company size classification changes
The government intends to lay the legislation for the changes this summer and aims for the new size limits to apply to financial years starting on or after 1 October 2024.

Other deregulation changes

Hollinrake said the government also intends to remove "several low-value, obsolete or overlapping requirements from the directors' report, and from the directors' remuneration report and policy" to "make it easier for companies to issue digital annual reports, and fix some technical issues in the audit regulatory framework that have been identified following the assimilation of EU law into UK law".

Finally, the government intends to consult later this year on:

  • increasing from 250 to 500 the maximum number of employees used in the definition of a medium-sized company for company reporting.

  • exempting medium companies from having to produce a strategic report.

  • exempting smaller public interest entities from audit tendering and rotation requirements.

Dan Martin
Dan MartinDan Martin Content & Events
I'm a freelance journalist and event host who helps small businesses and the organisations that support them. I'm also Enterprise Nation's news reporter and Bristol Local Leader. I have 20 years of experience as a small business journalist having interviewed hundreds of entrepreneurs from famous names like Sir Richard Branson and Deborah Meaden to the founders behind brand new start-ups. I've worked for a range of leading small business publications and support groups, most recently as head of content at Enterprise Nation where I was responsible for the prolific output of content on the company's blog and social media. I now freelance for Enterprise Nation as the website's news reporter and as the host of the Small Business sessions podcast. I'm based in Bristol where I run and host regular events with the local small business community in my role as Enterprise Nation's Local Leader for Bristol. I also have strong connections with other major business organisations in the south west region. In total, I've hosted over 100 events including conferences with an audience of hundreds for international brands like Xero and Facebook and live web chats from inside 10 Downing Street. With my partner, I co-run Lifestyle District, a lifestyle blog focused on culture, art, theatre and photography.

You might also like…

Get business support right to your inbox

Subscribe to our newsletter to receive business tips, learn about new funding programmes, join upcoming events, take e-learning courses, and more.