The April 2025 Audit Thresholds: One Year On, and the Companies That Quietly Slipped Out of the Net
Twelve months after the biggest uplift to UK company size thresholds in two decades, we map who moved category, who lost an auditor, and what the public register will and won't show in 2026 and 2027.
On 6 April 2025 the Government carried out the largest single revision to UK company size thresholds since the Companies Act 2006 was enacted. The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303) raised the monetary tests for micro-entities, small companies and medium-sized companies by roughly 50 per cent. Twelve months on, the first full set of accounts drawn up under the new tests is starting to land at Companies House. The picture emerging on the public register is not the one most commentary anticipated last spring.
This is a piece about who actually moved category, what disappeared from the public record as a result, and where the transitional rules quietly create a one-year window in which the published accounts and the company's true size do not match.
What changed, in one table
The statutory size tests are set out at sections 382 to 384B and 465 to 466 of the Companies Act 2006. A company satisfies a size category if it meets two out of three of the following tests in a given financial year (and, subject to the two-year rule discussed below, in the prior year). The April 2025 uplift left the headcount tests untouched and raised the two financial tests. The headline figures, alongside the previous limits in force from 2016 to 5 April 2025, are as follows.
| Category | Test | Before 6 April 2025 | From 6 April 2025 | Change |
|---|---|---|---|---|
| Micro-entity | Turnover not more than | £632,000 | £1,000,000 | +58% |
| Micro-entity | Balance sheet total not more than | £316,000 | £500,000 | +58% |
| Micro-entity | Employees not more than | 10 | 10 | – |
| Small | Turnover not more than | £10.2m | £15.0m | +47% |
| Small | Balance sheet total not more than | £5.1m | £7.5m | +47% |
| Small | Employees not more than | 50 | 50 | – |
| Medium | Turnover not more than | £36m | £54m | +50% |
| Medium | Balance sheet total not more than | £18m | £27m | +50% |
| Medium | Employees not more than | 250 | 250 | – |
The same uplift applies, with appropriate gross-versus-net adjustments, to the parent-company tests for qualifying as a small or medium-sized group under sections 383 and 466. Companies in the FCA's regulated population, ineligible groups under section 384, and traded entities remain outside the regime regardless of size.
The regulations apply to financial years beginning on or after 6 April 2025. For most companies with a 31 March year-end the new thresholds therefore bite from the year ended 31 March 2026, the first wave of which are now landing on the register.
How many companies actually moved category
Companies House's most recent statistical release puts the active corporate population at approximately 5.4 million entities. Of those, in round numbers and based on accounts taxonomy data published over the past three filing seasons:
- Around 3.2 million file as micro-entities under section 384A (FRS 105).
- A further 1.6 million file as small companies under section 477 (FRS 102 Section 1A).
- Around 35,000 file as medium-sized.
- Roughly 15,000 file as large or are otherwise ineligible for the small-companies regime.
The practical effect of the uplift, modelled against the size distribution of accounts filed in 2023 and 2024, is broadly threefold:
- An estimated 113,000 companies that previously fell in the small bracket now qualify as micro-entities. They become eligible for the abridged FRS 105 disclosure regime — a single page of balance sheet, no directors' report, no notes beyond the statutory minimum.
- An estimated 14,000 companies that previously sat in the medium-sized bracket move down to small. The most consequential effect for this group is the loss of the statutory audit requirement under section 477, subject to the group and ineligibility tests still being met.
- An estimated 6,000 companies move from large to medium-sized, escaping the strategic report content requirements specific to large companies and the more granular directors' report disclosures.
Those figures are projections rather than register counts; the actual moves will not be visible in the data until the bulk of 2025–26 accounts are filed during 2026 and 2027. But the order of magnitude is clear: the uplift removed an audit requirement from somewhere between 12,000 and 16,000 companies that had been audited in the prior year. That is the largest single shrinkage of the audited population since the audit-exemption threshold was first introduced in 1994.
What disappears from the public register
The practical consequence of category movement is loss of disclosure rather than loss of preparation. A company that drops from small to micro-entity is still preparing accruals-based accounts; what changes is what reaches the register. The table below sets out, broadly, what each regime does and does not require to be filed.
| Document or disclosure | Micro | Small | Medium | Large |
|---|---|---|---|---|
| Profit and loss account on register | No | No (filleted) | Yes | Yes |
| Directors' report on register | No | No | Yes | Yes |
| Strategic report | No | No | Yes (limited) | Yes |
| Auditor's report on register | Not required | Not required (if exempt) | Yes | Yes |
| Section 172 statement | No | No | No | Yes |
| Streamlined Energy and Carbon Reporting | No | No | No (unless qualifying) | Yes (if qualifying) |
| Average number of employees | Yes (note) | Yes (note) | Yes | Yes |
For users of the register — credit teams, procurement, journalists, due-diligence providers — the largest practical loss from the April 2025 reset is the disappearance of profit-and-loss data and audit opinions for the cohort that has moved from medium to small. That cohort had revenues between £36m and £54m and is, by any reasonable measure, the spine of the British mid-market. The April 2025 uplift means a counterparty doing business with one of those companies in 2026 will, if the company fillets its accounts, see only an abridged balance sheet on the public file.
Whether one regards this as welcome deregulation or a transparency loss depends on where one sits. From an editorial perspective, our view is unambiguous: the disclosure cliff between medium and small has widened, and the consequences for register-based due diligence in 2026 and 2027 will be material.
The two-year rule and the transitional easement
The two-out-of-three size test is normally subject to a stability rule at section 382(2): a company keeps its prior-year category unless it has met the new category's tests in two consecutive years. The April 2025 regulations include a transitional easement that disapplies the prior-year condition for the first year in which the new thresholds are in force. In practice this means:
- A company whose 2025–26 figures meet the new small-company tests is treated as small for that year, even if its 2024–25 figures (measured against the old, lower thresholds) did not.
- The easement is one-shot. From the 2026–27 financial year onward, the standard two-year rule reapplies on the new threshold scale.
The practical implication is that some companies will publish small-regime filleted accounts for the year ended in 2026 having published medium-sized audited accounts the year before. Without an understanding of the transitional easement, that swing looks like a category re-statement or a downward business correction. It is neither.
What this means for accounts you'll see on the register in 2026 and 2027
For anyone who reads filings as part of their day job, three practical observations apply:
- Audit reports will become a less reliable proxy for company size. A company filing without an auditor's report from 2026 onward may be small under the new tests rather than dormant or distressed. Confirm by reading the accounts, not by counting filings.
- Year-on-year comparability is broken for one filing season. Consolidation movements, prior-year restatements and the optional early adoption permitted under regulation 4 of SI 2024/1303 mean that 2025–26 comparatives are not always like-for-like with 2024–25.
- Group accounts behave differently. A parent that benefits from the small-group exemption from consolidation under section 399 may now do so where previously it did not, eliminating consolidated figures from the register entirely. Subsidiary-level accounts under section 479A become the only public window into trading.
For a practical guide to reading what does remain on the register, our forthcoming series on filleted accounts and the section 444 filing options will set out a workflow for users who can no longer rely on a profit and loss line being there.
Editorial verdict
The April 2025 uplift was framed as inflation catch-up. The 2016 thresholds had not moved, so a 50 per cent uplift after nine years of cumulative inflation is defensible arithmetically. What the policy debate underplayed is the asymmetric effect on the public register: the regulation reduces filing burden for companies, but it also reduces the public information available about a population of mid-market businesses that, in aggregate, employ millions of people and move tens of billions of pounds through the supply chain.
One year in, the headline number worth holding on to is this: the April 2025 reset has moved roughly 130,000 companies down a category, and stripped a statutory audit from somewhere between 12,000 and 16,000 of them. Those filings will start arriving on the register through 2026 and into 2027. Anyone whose work depends on the public record should plan now for what those filings will, and will not, contain.