The Companies Act 2006 (‘The Act’) brought about significant changes to the way companies in the UK must operate. Various duties relating to the governance of a company are set out for both public and private companies, consolidating and simplifying corporate law.
One of the key aspects of The Act relates to company reporting requirements. The Act defines the thresholds for small, medium and large UK companies which determines their annual reporting requirements; the requirements differ depending on a company’s classification of size.
- Small companies are not required to produce annual reports.
- Medium companies are required to produce annual reports, but are not required to include sustainability information.
- Large companies are required to produce annual reports, and must include sustainability-related information within this (the impact of the company’s operations on the environment).
The thresholds for small, medium and large companies have recently been updated, and will apply for financial years beginning on or after 6th April 2025, with companies having to meet at least 2 of the 3 thresholds (turnover, balance sheet, employees) for both the current and previous year.
| Small | Medium | Large | ||||
|---|---|---|---|---|---|---|
| Current | New | Current | New | Current | New | |
| Turnover | Less than £10.2 million | Less than £15 million | Less than £36 million | Less than £54 million | £36 million or more | £54 million or more |
| Balance sheet | Less than £5.2 million | Less than £7.5 million | Less than £18 million | Less than £27 million | £18 million or more | £27 million or more |
| Employees | Less than 50 | Less than 50 | Less than 250 | Less than 250 | 250 or more | 250 or more |
For many companies, this will mean they will shift categories from large to medium, or medium to small which will result in reduced reporting requirements for them. Companies should therefore review the updated categories and Regulations to ensure compliance obligations are understood and requirements can be met.
