What are the changes to company size classifications?

The Government has announced impending changes to simplify reporting for Small and Medium-sized Enterprises (SMEs) which is estimated to save thousands of UK businesses approximately £150 million per year. 

The changes will apply to financial years commencing on or after 1st October 2024. 

Changes include raising the company size thresholds by 50%, making roughly 132,000 more businesses qualify as Small and Medium-sized Enterprises (SMEs). 

The definition of a medium business is they must meet at least 2 of the following conditions: 

Current	New
50 to 249 employees	50 to 249 employees
Turnover of less than or equal to £36 million	Turnover of less than or equal to £54 million
A balance sheet total less than or equal to £18 million	A balance sheet total less than or equal to £27 million

The definition of a small business is they must meet at least 2 of the following conditions: 

Current	New
Less than or equal to 50 employees	Less than or equal to 50 employees
Turnover of less than or equal to £10.2 million	Turnover of less than or equal to £15 million
A balance sheet total of less than or equal to £5.1 million	A balance sheet total of less than or equal to £7.5 million

The definition of a micro business is they must meet at least 2 of the following conditions: 

Current	New
Less than or equal to 10 employees	Less than or equal to 10 employees
Turnover of less than or equal to £632,000	A turnover of less than or equal to £1 million
A balance sheet total of less than or equal to £316,000	A balance sheet total of less than or equal to £500,000

The Government will consider further changes later this year including exempting medium-sized companies from producing strategic reports and raising the employee size threshold from 250 to 500 employees. 

TaxAssist Accountants can help you with your company accounts  

TaxAssist Accountants are experts in company accounts and can ensure you meet your obligations. Call us today to arrange a free consultation on 0203 862 2059 or use our online contact form. 

 

Date published 27 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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