18 February 2025
The Department for Business and Trade (DBT) has confirmed that the company size thresholds are to be uplifted by 50% with the exception of the number of employees test.
You can read the following documents for the full detail:
- The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024
- The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 - Explanatory Memorandum
- Non-financial reporting review: impact assessment (revised)
The new thresholds from April 2025 will be as follows:
|
|
Micro |
Small |
Medium |
Large |
|
Annual turnover |
1m |
15m |
54m |
Over 54m |
|
Balance sheet total |
500k |
7.5m |
27m |
Over 27m |
|
Average no. of employees |
10 |
50 |
250 |
Over 250 |
Within the explanatory notes, it is explained how this will impact small companies impacted by the threshold changes with regards to off-payroll (IR35) compliance:
“Size classification under the Companies Act 2006 also impacts the application of the off-payroll working tax rules, under Part 2 of the Income Tax (Earnings and Pensions) Act 20036 , commonly referred to as IR35. These rules ensure that workers pay broadly the same taxes as direct employees, regardless of the structure they work through. The size of the business engaged with the worker determines which party is responsible for ensuring compliance with the rules. If the business is small, the worker’s intermediary is responsible for determining whether the rules apply. Otherwise, the business must operate the rules.”
This will apply to companies based on the last full tax years data, companies may want to assess if they are still the responsible party for applying the off-payroll working rules.
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