Questions and Answers
What are the changes to company size classifications?
I have heard that the size classifications of companies between small and medium are changing. Is this correct?
By Catherine Heinen, FCCAThe 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.
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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.Catherine Heinen, FCCA
Catherine is a Technical Content Writer at TaxAssist Accountants, and a qualified accountant. With experience working at two accountancy practices in the UK top 50 accountancy firms according to Accountancy Age, Catherine has significant experience in accounts, tax returns and advising clients. Catherine ensures businesses, business owners and individuals are kept up to date and informed by providing concise and informative technical material.
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