Audit thresholds have changed: What the April 2025 update means for your business

As of 6 April 2025, changes to UK company size thresholds have come into effect. These changes will alter which businesses are required to have a statutory audit — and which may no longer need one. Whether your business is growing or now newly exempt, it’s important to understand what these changes mean for your reporting obligations and financial oversight.

But first, let’s take a moment to revisit why audits matter.

What Is an Audit and Why Is It Needed?

A statutory audit is an independent review of a company’s financial statements. Its purpose is to confirm that a company’s accounts provide a true and fair view of its financial position and comply with the relevant accounting standards.

Audits provide assurance to directors, shareholders, lenders, regulators, and other stakeholders that a business is being run with transparency and integrity. They are particularly important for:

• Companies with significant turnover or complex structures
• Businesses looking to attract investment, borrow funds, or prepare for sale
• Regulated industries where assurance is a requirement
• Boards and business owners who want independent oversight and peace of mind

An audit can help uncover inefficiencies, strengthen internal controls, and support better strategic decision-making — making it a valuable tool for any growing business, not just a compliance obligation.

What’s Changed?

The UK Government has updated the thresholds used to determine whether companies and LLPs qualify as micro, small, or medium-sized. These thresholds, previously unchanged since 2013, have now been adjusted to reflect inflation and reduce reporting burdens.

Here is a summary of the new thresholds, effective from 6 April 2025:

Size	Turnover	Balance Sheet Total *	Average Employees
Micro	Up to £1 million	Up to £500,000	Up to 10
Small	Up to £15 million	Up to £7.5 million	Up to 50
Medium	Up to £54 million	Up to £27 million	Up to 250

Companies qualify as a given size if they meet any two of these three criteria.

* Balance sheet total = Gross assets (Fixed assets + Current assets)

What This Means for Your Business

If Your Company Now Falls Into a Smaller Size Category
You may now be exempt from statutory audit, depending on your business structure or sector (subject to your governing document and any group membership implications).
You may also no longer need to produce a Strategic Report (for small companies) or a Directors’ Report (for micro-entities).

This can reduce compliance time and cost, but it’s important to consider whether continuing with a voluntary audit might still be the right choice — especially if you rely on external funding or want to maintain governance standards.

If Your Company Now Falls Within the Audit Threshold
If your business has grown and now exceeds the new size thresholds, you may be newly required to have an audit. In this case, early preparation and working with the right audit partner will help ensure your reporting remains compliant and your business gains valuable insights in the process.

Why Many Businesses Choose to Be Audited Voluntarily

At Ward Williams, we work with many companies that choose to maintain a voluntary audit — even when they are exempt — because of the advantages it offers:

• Stronger financial credibility with banks, investors, and stakeholders
• Better understanding of business risks and operational efficiencies
• Greater confidence in decision-making and strategic planning
• A governance and control framework that supports sustainable growth

How Ward Williams Can Help

Our Audit & Assurance team works with businesses of all sizes, from fast-growing SMEs to complex corporate structures. Our audits are tailored to your needs and designed to deliver clarity, confidence, and strategic value.

We offer:

• Independent financial reporting to meet regulatory and stakeholder expectations
• Insight into financial and operational risks through risk-based auditing
• A structured, well-communicated audit process that limits disruption
• Ongoing advisory relationships that grow alongside your business

We also support fellow professionals and accountancy firms across the UK who need reliable, independent audit services.

Let’s Talk About What’s Right for Your Business

If you’re unsure how these changes affect your reporting obligations — or you’d like to explore how audit could benefit your business even without a legal requirement — we’re here to help.

We’ll help you navigate change with confidence and turn your financial reporting into a strategic advantage.

To find out more information contact the Audit & Assurance Team at Ward Williams to explore your options with a trusted, independent perspective on 01932 830664 or email enquiries@wardwilliams.co.uk. Visit our website www.wardwilliams.co.uk/audit