UK Audit Exemption Checker
Check whether a UK company may require a statutory audit under Companies Act 2006 rules, including small company exemption, dormant companies, group structures, overseas ownership and parent guarantee exemptions.
For financial years beginning on or after 6 April 2025, use the increased small company limits of turnover not more than £15 million, balance sheet total not more than £7.5 million and no more than 50 employees. For financial years beginning between 1 January 2016 and 5 April 2025, use the previous limits of turnover not more than £10.2 million, balance sheet total not more than £5.1 million and no more than 50 employees.
Answer the questions below
1. Is the company automatically ineligible?
A company is ineligible if it is a public limited company (PLC), a traded company with transferable securities admitted to trading on a UK regulated market, an authorised financial institution such as an insurance company, banking company, electronic money issuer, Markets in Financial Instruments Directive (MiFID) investment firm or Undertakings for Collective Investment in Transferable Securities (UCITS) management company, a company carrying on insurance market activity or acting as a scheme funder of a Master Trust pension scheme, or a member of an ineligible group.
2. Is the company dormant for the whole financial year?
A dormant company normally has no significant accounting transactions during the year.
3. Is this the company’s first financial year?
First-year companies are assessed based on the first financial year rather than needing two consecutive years of small status.
4. Does the company qualify as small in its first year?
A company is generally small if it meets at least two of the relevant limits for the financial year. For years beginning on or after 6 April 2025, the limits are turnover not more than £15 million, balance sheet total not more than £7.5 million and no more than 50 employees. For years beginning before 6 April 2025, the previous limits were £10.2 million turnover, £5.1 million balance sheet total and no more than 50 employees.
5. Is the company part of an ineligible group?
A group is ineligible if any member is a company or body corporate with securities admitted to trading on a UK regulated market, a non-small entity authorised under Part 4A of the Financial Services and Markets Act 2000 to carry out regulated activities, a small authorised insurance company, banking company, electronic money issuer, Markets in Financial Instruments Directive (MiFID) investment firm, Undertakings for Collective Investment in Transferable Securities (UCITS) management company, or a person carrying on insurance market activity.
6. Is the company standalone and not part of a group?
If the company has no parent and no subsidiaries, it is assessed on its own size and eligibility.
7. Does the standalone company qualify as small?
For an existing company, the two-year rule normally applies when moving into or out of small company status. Use the thresholds that apply to the relevant financial year: £15 million turnover and £7.5 million balance sheet total for years beginning on or after 6 April 2025, or £10.2 million turnover and £5.1 million balance sheet total for years beginning before that date. The employee limit remains 50.
8. Is there a higher UK parent willing to provide a Companies Act s479A parent guarantee?
This can apply to a UK subsidiary or intermediate parent that is itself a subsidiary of a qualifying UK parent.
9. Are all parent guarantee conditions met?
Conditions include shareholder consent, parent guarantee of outstanding liabilities, relevant statements in parent's consolidated accounts and required Companies House filings.
10. Does the worldwide group qualify as small?
For group companies without a qualifying UK parent guarantee, assess the entire worldwide group, not only the UK subgroup. For years beginning on or after 6 April 2025, small group limits are £15 million net turnover or £18 million gross, £7.5 million net assets or £9 million gross, and no more than 50 employees. For years beginning before 6 April 2025, use the previous £10.2 million net or £12.2 million gross turnover and £5.1 million net or £6.1 million gross asset limits, with the same 50 employee limit.
11. Is the worldwide group ineligible?
A group is ineligible if any member is a company or body corporate with securities admitted to trading on a UK regulated market, a non-small entity authorised under Part 4A of the Financial Services and Markets Act 2000 to carry out regulated activities, a small authorised insurance company, banking company, electronic money issuer, Markets in Financial Instruments Directive (MiFID) investment firm, Undertakings for Collective Investment in Transferable Securities (UCITS) management company, or a person carrying on insurance market activity.
This is an indicative result. For complex group structures, regulated activities, acquisitions, first-year periods, or borderline thresholds, obtain professional advice before relying on an exemption.
How UK audit exemption is assessed
The audit requirement depends on company size, group structure, eligibility and whether a separate parent guarantee route is available.
Small company thresholds
- For financial years beginning on or after 6 April 2025: turnover not more than £15 million, balance sheet total not more than £7.5 million, and no more than 50 employees
- For financial years beginning between 1 January 2016 and 5 April 2025: turnover not more than £10.2 million, balance sheet total not more than £5.1 million, and no more than 50 employees
- At least two out of three limits must be met
Small group thresholds
- For financial years beginning on or after 6 April 2025: aggregate turnover not more than £15 million net or £18 million gross, aggregate balance sheet total not more than £7.5 million net or £9 million gross, and no more than 50 employees
- For financial years beginning between 1 January 2016 and 5 April 2025: aggregate turnover not more than £10.2 million net or £12.2 million gross, aggregate balance sheet total not more than £5.1 million net or £6.1 million gross, and no more than 50 employees
- At least two out of three limits must be met
Two-year rule
- Existing companies usually move into or out of small status after two consecutive years
- First-year companies are assessed on the first year only
- Transitional rules may apply after threshold changes
Group companies
- Standalone company size is not always enough
- The worldwide group may need to qualify as small
- Overseas-owned UK subsidiaries often require careful review
Parent guarantee exemption
- Available to qualifying subsidiaries, including some intermediate parents
- Can apply regardless of the subsidiary’s size
- Requires statutory conditions, consent and Companies House filings
Ineligible companies
- Public companies
- Authorised insurers and banking companies
- E-money issuers, MiFID firms and UCITS management companies
- Certain other regulated or public-interest entities
Other audit triggers
- Shareholders holding at least 10% may request an audit
- Articles of association may require an audit
- Lenders, investors or group reporting may require voluntary audit work
UK audit exemption frequently asked questions
Clear answers to common questions on statutory audit requirements, small company exemptions and group structures.
Does every UK company need an audit?
Companies Act 2006 starts from the position that annual accounts require audit unless an exemption applies. Common exemptions include small company exemption, dormant company exemption and subsidiary exemption by parent guarantee.
Which audit exemption thresholds apply before and after 6 April 2025?
For financial years beginning on or after 6 April 2025, the small company limits are £15 million turnover, £7.5 million balance sheet total and 50 employees. For financial years beginning between 1 January 2016 and 5 April 2025, the limits were £10.2 million turnover, £5.1 million balance sheet total and 50 employees. A company generally needs to meet at least two of the three limits.
Are dormant companies always audit exempt?
No. Dormant companies are usually audit exempt, but the position can change if the company is ineligible, regulated, public, part of an ineligible group, or subject to another audit requirement.
Does a company need to be small for two years?
For an existing company, the two-year rule usually applies when moving into or out of small company status. In the first financial year, the company is assessed based on that year only.
Does a parent company use standalone size or group size?
A parent company normally assesses the size of the group it heads. A small parent heading a medium or large group may still require an audit.
Do overseas-owned UK subsidiaries need an audit?
Often yes. If the worldwide group is not small and there is no qualifying UK parent guarantee exemption, the UK subsidiary may need an audit even if the UK company itself is small.
Can a medium or large company be audit exempt?
Yes, in some cases. A subsidiary or intermediate parent may be exempt under the s479A parent guarantee route where a qualifying UK parent gives the required guarantee and all statutory conditions are met.
What if shareholders ask for an audit?
Shareholders holding the required percentage of shares or voting rights can request an audit. This can override an otherwise available exemption.
Can Accoura Advisors arrange the audit if one is required?
Yes. Accoura Advisors can introduce you to registered audit firms with suitable sector experience, group reporting capability and capacity.
Source material behind this checker
The tool is based on Companies Act 2006 audit exemption principles and official UK guidance.
Need a technical review of your audit position?
Audit exemption can be fact-sensitive, especially for overseas-owned groups, intermediate parents, regulated entities, acquisitions and first-year accounts. Accoura Advisors can connect you with a qualified UK audit or accounting specialist.
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