The government has published new legislation, effective from 6 April 2025, to increase the monetary size thresholds that determine whether a company is entitled to the regimes for micro, small and medium-sized entities. The table below sets out the new size thresholds that apply for accounting periods commencing on or after 6 April 2025 alongside the previous thresholds. As before, the company size limits are met if any two of the three thresholds are met.

Transitional provision

The "two-year rule" is a provision that applies when determining a company's size for corporate reporting purposes. A company qualifies as micro, small or medium-sized once it has the met the size limits in its first ever financial year or otherwise in any two consecutive financial years. Thereafter, the company remains qualified for that regime until it fails to meet the size limits for any two consecutive financial years (ie, it will not qualify as micro, small or medium-sized in the second year).

The new legislation includes a transitional provision for the application of the “two-year rule”. When determining company size for a financial year beginning on or after 6 April 2025, the transitional provision allows preparers to assume that the new thresholds had been applicable in the previous financial year. As a result, companies can benefit from the threshold uplift as soon as possible after the legislation comes into effect.

For more information about the assessment of whether a company qualifies as a micro-entity or a company or group qualifies as a small entity, visit:

• Helpsheet: Is a company or group small?
• Helpsheet: Is a company micro?

For more information about the simplifications available to small and micro- entities please visit:

• Micro-entities reporting – simplifications
• Small entity reporting – simplifications

Limited liability partnerships

The increased thresholds apply to limited liability partnerships via amendments to The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008. LLPs will also be able to apply the transitional provision for the application of the “two-year rule” mentioned above.

In addition, the new regulations remove several obsolete or overlapping requirements relating to the contents of the directors’ report. These changes are also effective from 6 April 2025.

Small entities will no longer be required to provide information on the employment of disabled people.

Large and medium-sized entities will no longer be required to include information relating to the items listed below in the directors’ report:

• the use of financial instruments;
• important events that have occurred since the end of the financial year;
• likely future developments in the business of the company;
• research and development activities;
• the existence of branches outside the UK;
• the employment, training and advancement of disabled persons; and
• engagement with employees, suppliers, customers and others.

To find out more about the requirements for content, approval and filing of the directors’ report, visit:

• Directors’ report

For further guidance on the strategic report and directors’ report, ICAEW members and Corporate Reporting Faculty subscribers can visit:

• Strategic Report and Directors Report Factsheet
• The strategic report: overview and best practice guidance
• The strategic report: scoping and content

For further guidance on simplifications available to small and micro-entities, visit:

• Factsheet: Preparing and filing UK small entity accounts
• Factsheet: Preparing and filing Micro-Entity accounts
• Small and micro-entity reporting hub