Strategic Choices: What the New Audit Thresholds Mean for Your Business

A change in UK business regulation arrives this April, as the government introduces the most substantial adjustments to audit thresholds in recent years. The changes to the audit thresholds are set to take effect for financial years starting on or after 6th April 2025. For business leaders and company directors, these changes present both opportunities and important strategic considerations.

Discover how the new audit thresholds, will impact businesses in our latest article from Josh Bowden.

The new thresholds will mean small businesses will be exempt from mandatory audits if they meet two of three new criteria: annual turnover under £15 million (up from £10.2 million), gross assets below £7.5 million (increased from £5.1 million), or fewer than 50 employees. This is a significant raise from previous thresholds and could free approximately 132,000 businesses from mandatory audit requirements. 

For larger enterprises, medium-sized company thresholds are also increasing substantially - to £54 million turnover and £27 million in gross assets. The government is also considering raising the employee threshold for medium-sized enterprises from 250 to 500, potentially offering greater flexibility for personnel heavy businesses.

While these changes represent welcome regulatory relief for many businesses, they should not be viewed simply as an opportunity to reduce costs. Instead, see it as an opportunity to review your approach to financial reporting. The decision to opt in for a voluntary audit needs to be done with informed decisions based on your own situation and your future goals. 

For some, the cost savings from audit exemption could fuel expansion or innovation. For others, continuing to maintain voluntary audits will add value, especially to secure funding or investments and maintain stakeholder confidence. Moreover, regular audits often identify operational inefficiencies and potential risks before they become significant issues.

Josh Bowden, Associate Director at Wright Vigar comments, “It is important for business owners to assess their unique situation and explore how these new thresholds might benefit their business strategy. Whether that means identifying opportunities to reinvest audit savings or developing alternative approaches to maintain financial oversight, we can assist or provide advice to ensure you are well-positioned to make the most of these changes.”

If you wish you can view the published legislation here: The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024.

Contact us to arrange a meeting about your options. Email us at action@wrightvigar.co.uk or call 01522 531 341.