Simplified Summary of New Company Regulations (Effective April 2025)
Key Changes for Company Directors
New government rules will increase company size limits and reduce reporting requirements starting from April 2025. These changes aim to simplify reporting, reduce complexity, and account for inflation since the last update in 2013.
New Size Thresholds (from April 6, 2025)
A company falls within a size category if it meets at least two of the three criteria below:
Category | Turnover (Max) | Balance Sheet Total (Assets) | Employees (Max) |
Micro | £1 million | £500,000 | 10 |
Small | £15 million | £7.5 million | 50 |
Medium | £54 million | £27 million | 250 |
These changes also apply to Limited Liability Partnerships (LLPs).
How This Affects Companies
The updated thresholds mean that many companies will move into smaller categories, reducing their reporting obligations:
- 113,000 companies from small to micro-entity.
- 14,000 companies from medium to small.
- 6,000 companies from large to medium.
Key Benefits
- Micro-entities: No need to prepare a Directors’ Report.
- Small entities: No statutory audit or Strategic Report required.
- Medium entities: Fewer Strategic Report requirements.
Transition Period
A transitional provision in the legislation ensures that if the size criteria apply in the current financial year, they are considered to have also applied in the previous financial year.
Consequently, companies and LLPs can benefit from the updated threshold size changes in their first accounting period starting on or after 6 April 2025, provided they meet the two-year test by applying the new limits to prior years, even if they did not qualify as small under the previous limits.
Changes to the Directors’ Report
The government is also simplifying the Directors’ Report for medium and large companies.
The following information will no longer need to be included:
- Financial instruments
- Important events that have occurred since the end of the financial year
- Likely Future developments
- Research and development (R&D)
- Branches outside the UK
- Engagement with employees, customers, and suppliers (as covered under s172 statement requirements)
Additional Changes Coming Soon
More updates are expected next year to simplify the Directors’ Remuneration Report and audit rules.
These changes are designed to reduce administrative work, making compliance easier for businesses.
You can find out more using the link below
