From April 2025 new regulations will come into force which will increase company size thresholds and remove some of the requirements for the Directors’ Report.
The uplift in thresholds of micro, small and medium sized companies is the first uplift since 2013.
* Balance sheet total is another way of saying total assets of the company
The new size thresholds will also apply to Limited Liability Partnerships (LLPs)
But what do the increased threshold mean for my business?
It is estimated that thousands of companies will move down a category, meaning they will then enjoy the reduced reporting and audit requirements of a lower regime. We believe directors will generally welcome these changes. However, reduced reporting requirements may not be welcome by other stakeholders using the information for broader purposes.
Perhaps the most will be seen by companies moving to the small company threshold. Not only will they have simpler accounting and reporting requirements but the benefits will also include becoming exempt from a statutory audit and the need for a strategic report. However, there will still be circumstances where a small company may be required to have an audit, for example being part of a group or where one is required by the company’s bank or shareholders.
Companies moving down into the micro entities’ regime will no longer need to prepare a directors’ report.
What changes are happening to the Directors’ Report?
These changes will mean that large and medium-sized entities will no longer be required to include various pieces of information in their Directors' Report which include risks relating to financial instruments (contracts), research & development, significant events which happened after the financial year end and the company’s engagement with employees, suppliers and customers.
If you want to speak to us about how these changes may affect your business, please get in touch with our managing director, Adam, and he will be happy to talk through the changes with you.
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