Audit thresholds · UK guide · Updated May 2026
UK audit thresholds 2026: when does your company need an audit?
Written by Iftikhar Rashid FCCA. [VERIFY all thresholds at gov.uk before acting.]
Short answer
Most small UK limited companies do not need a statutory audit. The small company audit exemption applies to companies that meet at least two of three size criteria (turnover, balance sheet, employees). All thresholds must be verified at gov.uk as they are updated by legislation. [VERIFY at gov.uk/audit-exemptions-for-private-limited-companies]
Small company audit exemption — 'two out of three' test [VERIFY]
| Criterion | Threshold [VERIFY at gov.uk] |
|---|---|
| Annual turnover | [VERIFY current threshold at gov.uk] |
| Balance sheet total (assets) | [VERIFY current threshold at gov.uk] |
| Average number of employees | [VERIFY current threshold at gov.uk] |
A company qualifies for audit exemption if it meets at least two of the three criteria above in the relevant financial year. Both the current and previous year are assessed. [VERIFY thresholds at gov.uk — they were updated by the Companies and Partnerships (Accounts and Reports) Regulations]
FAQs
When does a UK company need a statutory audit?
A UK limited company must have a statutory audit unless it qualifies for the small company audit exemption. Most small companies qualify for the exemption and do not need an audit. The exemption applies if a company meets at least two of three criteria in the relevant financial year: turnover below the threshold, balance sheet total below the threshold, and employees below the threshold. [VERIFY: current thresholds at gov.uk/audit-exemptions-for-private-limited-companies]
What are the audit thresholds for small companies in the UK?
The small company audit exemption thresholds have been updated. A company is 'small' if it meets at least two of: annual turnover not more than [VERIFY at gov.uk]; balance sheet total not more than [VERIFY at gov.uk]; number of employees not more than [VERIFY at gov.uk]. All three thresholds should be verified at gov.uk as they change with legislation. [VERIFY: current audit thresholds at gov.uk]
Which companies cannot use the audit exemption?
Certain companies must have a statutory audit regardless of size: public companies (plc); companies in regulated sectors (banking, insurance, some financial services); companies that are subsidiaries in a group where any member is a public company; companies where shareholders holding 10% or more of shares request an audit; and charities above certain thresholds. [VERIFY: current list at gov.uk]
What is the difference between an audit and standard annual accounts?
Standard annual accounts are prepared by the company's accountant and filed at Companies House. A statutory audit is an independent examination of the accounts by a Registered Auditor, who must have a Responsible Individual at an ICAEW or ACCA firm. The auditor gives a formal opinion on whether the accounts give a true and fair view. Most small companies do not need this — their accounts are prepared and filed without it.
Do Birmingham small businesses need an audit?
Most Birmingham small businesses — sole traders, limited companies with turnover below the audit threshold — do not require a statutory audit. They need annual accounts prepared and filed with Companies House, but not an independent audit. RR Accountants prepares accounts for Birmingham limited companies that fall within the small company exemption. If your company is approaching audit thresholds, we advise proactively.
- Year end accounts explained
- Accountants for limited companies
- Chartered accountants Birmingham
- Corporation tax explained
Approaching audit thresholds?
We advise Birmingham companies approaching the thresholds on what an audit means in practice and whether a voluntary audit makes sense.
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