Audit exemption thresholds

In most cases, small companies that meet at least 2 of the 3 size conditions do not need an annual statutory audit. However, the audit exemption rules are subject to change, and some companies still need an audit even if they would otherwise qualify as small.

What are the thresholds now?

For financial years beginning on or after 6 April 2025, a company may qualify for audit exemption if it meets at least 2 of the following 3 conditions:

• Yearly turnover of no more than £15 million
• Assets under £7.5 million
• An average of 50 or fewer employees

When did the last audit exemption change take effect?

The audit exemption thresholds changed for financial years beginning on or after 6th April 2025. That means the new limits do not apply simply because the calendar year is 2025–2026 – they apply by reference to the start date of the relevant financial year or accounting period.

For some companies, this may mean a final statutory audit is still required for an earlier period before the new thresholds begin to apply. Established companies moving into or out of the small companies regime may also need to consider the two-year rule and any transitional provisions before concluding that an audit is no longer required.

Do all small companies get an audit exemption?

Most, but not all, companies that meet the small-company size conditions qualify for audit exemption.

However, it’s worth bearing in mind that some small companies still need auditing. These include companies whose articles of association mandate an audit. They also include firms where shareholders holding at least 10% of the shares request one in time.

Certain types of business are also required to have an audit, regardless of size. You can find out more in our article Statutory audit: does my limited company need one?

Can I still audit my business if it is exempt?

Even if your company is exempt from audit, you may choose to have one anyway. This is known as a voluntary audit. Audits are a good way to obtain reasonable assurance that your financial statements are free from material misstatement. They also help you identify and manage risk. Some companies choose to have audits to help them sell the business or a significant number of shares in it. You can find out more about the benefits of an audit in our article, Understanding the purpose of an audit.

Where can I learn more about audit requirements?

At THP, we have been providing audit services to medium-sized companies since the 1980s. If you would like help determining whether you need a statutory audit, a member of our friendly audit team can help you. If you’d like to know how much an audit is likely to cost your business, our audit fee calculator is an invaluable resource. In addition, we’ve compiled a list of audit FAQs that provides you with answers to many questions about the auditing process.

If you do decide to undertake an audit with THP, you can rest assured that we are on the Register of Statutory Auditors. We can also supply you with testimonials from satisfied clients on request.