New Audit thresholds: What does this mean for your business?

The Government has published new legislation to increase company size thresholds, which determine whether a company requires a statutory audit, by 50 per cent from 6 April 2025.

As a result, an estimated 132,000 businesses' audits will no longer be compulsory.

The date this impacts a company will depend on its year end. For example, for those with a December year end, the first affected period will begin on 1 January 2026 and end on 31 December 2026. Similarly, for companies with a March year end, the first period commences 1 April 2026 and ends 31 March 2027. 

Confirmed audit threshold changes

• The turnover threshold will increase to not more than £15m turnover, from £10.2m
• The balance sheet total thresholds would increase to not more than £7.5m
• The employee number threshold remains at 50

While the benefits this will bring include reduced costs and removal of a regulatory burden for many, other valuable benefits an audit provides will also be lost. Having an audit is not just a box-ticking process; it can add value in many ways.

How does an audit benefit your business?

An audit reviews a company’s financial records and ensures it complies with regulatory requirements, it can identify growth opportunities, protect jobs, and improve internal control processes, as well as improve a business’s reputation, protect the value of the business and make it easier for companies to access financing and investment.

If, as a result of the proposed changes, your company would no longer require a statutory audit, it is worth considering the wider impact this will have on your business, rather than simply looking at the cost savings you will make.

Impact on growing businesses

If a rapidly growing business is initially exempt from audit requirements but may exceed the new threshold in a few years, additional planning and consideration will be essential.

Fast-growing businesses in particular will need to focus on ensuring that their internal control environment is properly structured to allow them to deal with growth. They may require additional access to funding and may realise a greater benefit of an audit than more mature businesses.

At Pierce, our dedicated audit team is here to provide expert advice and support on how these changes may affect your business. Get in touch with us today.