The entitlement to a particular company size regime is determined by reference to criteria set out in CA 2006. Qualitative factors are used to establish whether a company is excluded from a regime because of its nature. For example, public companies and certain financial services companies cannot qualify as micro-entities, small, or medium-sized companies. There are also restrictions in certain group situations, for example, when a company is part of an ‘ineligible group’.

A company will additionally need to assess whether it qualifies for a regime by meeting the relevant size thresholds for turnover, balance sheet total (meaning the total of the fixed and current assets) and the average number of employees. The company size limits are met for a financial year if any two of the three thresholds are met.

The government has published new legislation to increase the monetary company size thresholds for accounting periods commencing on or after 6 April 2025. The table below sets out the company size thresholds before and after the change.

The two-year rule

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 met the size limits in its first ever financial year or otherwise in 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.

For more information about the changes introduced in the new legislation visit:

• Changes in company size thresholds and directors’ report requirements

Find out more about the implications of these amendments in the following By All Accounts article:

• Article: It’s time to raise the threshold

There are special provisions available in CA 2006 for small companies and micro-entities when preparing and filing their annual accounts and reports. For more information on the criteria visit:

• Entitlement to the small companies regime
• Entitlement to the micro-entities regime

For more information about the requirements and simplifications available to small companies and micro-entities, including some practical considerations to help you choose the right financial reporting regime according to your circumstances visit:

• Small and micro-entity reporting – choosing the right regime

There are also some special provisions available to medium-sized companies when preparing their annual accounts and reports, for example, with regards to the information required in the strategic report and the directors’ report.

For more information on the criteria for medium-sized companies visit:

• Entitlement to the medium-sized companies regime

Any companies that do not meet the criteria to be a micro-entity, or a small or medium-sized company, are large companies and are required to prepare and file full accounts.

For detailed guidance on the criteria for each size regime of company in the Companies Act 2006, ICAEW members and Corporate Reporting Faculty subscribers can visit:

• Factsheet: Entitlement to the micro, small, medium and large companies regimes
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