Audit UK Guide: Stop Paying for an Audit Your SME Doesn't Need

Thousands of UK SMEs pay for a statutory audit they no longer need. New rules mean many companies now qualify for exemption. Here's how to check where you stand.

What Is a Statutory Audit, and Why Does It Cost So Much?

A statutory audit is an independent check of your company accounts by a registered auditor. It confirms your numbers give a true and fair view.

It's thorough. It's also expensive. Most small UK companies pay between £5,000 and £15,000 a year for one they might not legally require.

The Audit UK Thresholds Just Changed

From 6 April 2025, the audit exemption thresholds rose for the first time since 2016. Your company is exempt if it meets two of these three conditions:

Annual turnover of £15 million or less
Balance sheet total of £7.5 million or less
Average of 50 employees or fewer

That's a sharp jump from the old limits of £10.2 million turnover and £5.1 million balance sheet. Many businesses that needed an audit last year no longer do.

Does the Two-Year Rule Still Apply?

Yes. Your company size usually only changes once you meet or miss the conditions for two consecutive years.

A transitional rule helps here. For your first financial year starting on or after 6 April 2025, you can treat the new thresholds as if they already applied the year before. This means many companies qualify for exemption sooner than expected.

Who Still Needs an Audit, Regardless of Size

Audit exemption doesn't apply to everyone. You'll still need one if you're:

A public company
Part of an ineligible group
In a regulated sector, such as banking or insurance
Facing a request from shareholders holding 10% or more of your shares

Should You Drop the Audit Anyway?

Qualifying for exemption doesn't mean you should always claim it. Banks, investors, and some customers still ask for audited accounts. Losing that assurance can create friction at the wrong moment.

Review your internal controls first. If your systems are solid, dropping the audit is often the right call.

Check Your Position Before Your Next Year-End

The audit UK landscape has shifted. If your turnover sits between £10.2 million and £15 million, you may now be exempt for the first time.

Artifin Accountants helps UK businesses confirm their exemption status and file with confidence. Get in touch before your next filing deadline to see where you stand.

Comments

Navigating Your Self-Assessment Tax Return in the UK

A Simple Guide to Get You Ready: Introduction: Filing your Self-Assessment tax return might seem daunting, but it’s a necessary part of the UK tax system, helping you report your income accurately to HMRC. With the deadline for the 2024-2025 tax year set for 31st January 2025, getting started early can save you from unnecessary stress and penalties. In this guide, we’ll break down what Self-Assessment is, how to prepare, and what you need to stay on top of your tax responsibilities throughout the year. 1. What Is Self-Assessment? Self-assessment is how HM Revenue and Customs (HMRC) collects income tax. While most people have tax automatically deducted from wages or pensions, anyone with additional income—like freelancers, landlords, or people with investments—needs to submit a tax return. This might include earnings from: Self-employment Rental Properties Capital gains Overseas income Who needs to file? You’ll need to file if you’re: Self-employed A company director Earning...

Types of Exempt Income in the UK and How to Maximize Your Savings

Certain sources of income are tax-exempt in the United Kingdom, allowing you to reduce your tax payments while increasing your savings. Here's an overview of some popular sources of exempt income, as well as tactics for maximizing them. 1. Personal Allowance What It Is: Every UK taxpayer is entitled to a tax-free personal allowance, which is the amount of income that can be earned before paying income tax. The allowance for the 2023/24 tax year is £12,570. Maximizing Savings: If you are married or in a civil partnership and one of the spouses earns less than the allowance, you should explore the Marriage Allowance. This allows the lower-income couple to transfer up to 10% of their unused personal allowance to their partner, saving up to £252 a year in taxes. 2. Individual Savings Accounts (ISAs) What It Is: ISAs provide for tax-free growth and investment withdrawals up to a certain limit. The annual ISA allowance for the 2023/24 tax year is £20,000, which can be used to fund Ca...

How to Navigate Income Tax: Understanding Personal Allowance

Introduction Income tax is central in the fiscal budget as a way of ensuring that the government has adequate receipts to finance social services and development. To the average individual, it might be very hard to understand how income tax works, not to mention how to manage one’s income tax. In this case, one of the most integral components that influence how much tax one is supposed to pay is known as personal allowance. What is Personal Allowance? Personal allowance refers to the volume of income a person can make within a fiscal year without incurring income tax. For instance, the expected personal allowance from the UK government to most taxpayers is £ 12, 570 but the actual figure depends on income, and age, among other attributes. If the total income falls below the personal allowance, then the man or woman would not have to pay any income tax at all. This is the amount you are allowed to earn without being taxed because it is exempted from this tax, after which you are char...

Artifin Accountants UK

Search This Blog