The Government has announced its first set of planned regulatory changes which are designed to cut complexity and ease the reporting burden placed on UK businesses.

Legislation set to be laid out this summer will increase the thresholds that determine the size of a company for reporting purposes by 50%, as follows:

As a result of the changes, thousands of companies are affected in the following ways:

• A number of large companies will become medium-sized and will benefit from reduced reporting requirements;
• A number of medium-sized companies will fall into the small companies’ regime and benefit from audit exemption as well as preparing and filing simpler financial statements; and
• Finally, a number of small companies will become micro-entities and benefit from preparing and filing simpler accounts.

Further Proposals and Consultations:

The government plans to review the Directors’ Report disclosure requirements to improve and simplify its content.

Further consultations are expected later in 2024 regarding the definition of a medium-sized company for reporting purposes to increase the employees’ threshold from 250 to 500.

An exemption from the requirement for medium-sized companies to publish a Strategic Report is also expected.

Effective Date:

The expectation is that the changes will be effective for financial years commencing on or after 1 October 2024.

Our thoughts:

Shaw Gibbs welcomes the changes which are expected to enable more proportionate and streamlined reporting as well as potentially making the UK an even more competitive destination for inward investment.

Although the audit thresholds will increase, it can still be beneficial to have an audit. An audit process can help your company gain insight into systems and process improvements, give assurance to shareholders, reduce the likelihood of fraud and more.

How we can help:

If you have any questions regarding the above changes and/or your audit requirements, our dedicated Audit team at Shaw Gibbs will be glad to assist you.