The figures changed on 6 April 2025. Many companies moved down a size category without doing anything differently.
The short version
- A micro-entity meets two of three: turnover up to £1 million, balance sheet total up to £500,000, 10 employees or fewer.
- A small company meets two of three: turnover up to £15 million, balance sheet total up to £7.5 million, 50 employees or fewer.
- These figures rose in April 2025. They apply to financial years beginning on or after 6 April 2025. Older years use the previous thresholds.
- Size changes after two consecutive years, not after one, except in a company’s first financial year.
- From April 2028 micro-entities and small companies must file a profit and loss account with Companies House.
Micro-entity or small company?
Company size is not a label you choose. It is a test you either meet or you do not, and it decides how much you have to prepare, how much ends up on the public register, and which filing rules apply to you.
The thresholds that set it rose by roughly half in April 2025, the first significant uplift in a decade. A company that was small before the change may be a micro-entity now, with no change in its trading at all.
The thresholds today
A company qualifies for a size category by meeting at least two of the three conditions for it.
| Category | Turnover not more than | Balance sheet total not more than | Average employees |
|---|---|---|---|
| Micro-entity | £1 million | £500,000 | 10 |
| Small | £15 million | £7.5 million | 50 |
| Medium | £54 million | £27 million | 500 |
Anything above the medium thresholds is a large company.
What they were before
The previous figures stood for years and are still quoted widely, including in guidance that has not been updated.
| Category | Turnover, before | Turnover, now | Balance sheet, before | Balance sheet, now |
|---|---|---|---|---|
| Micro-entity | £632,000 | £1m | £316,000 | £500,000 |
| Small | £10.2m | £15m | £5.1m | £7.5m |
| Medium | £36m | £54m | £18m | £27m |
The employee thresholds did not change. They are 10, 50 and 500 as they were.
The new figures apply to financial years beginning on or after 6 April 2025. A financial year that started before that date is tested against the old thresholds, which is why both sets are still in circulation.
How the two of three test works
You do not need to meet all three conditions. You need any two.
A company with turnover of £900,000, a balance sheet total of £420,000 and four employees meets all three and is a micro-entity. A company with turnover of £1.4 million, a balance sheet total of £300,000 and six employees fails the turnover test but meets the other two, so it is still a micro-entity.
There is also a timing rule. A company normally has to meet the conditions for two consecutive financial years before its size changes, with the exception of its first financial year, where a single year is enough. This stops a company flipping category on one unusual year.
What being a micro-entity gets you today
Micro-entities prepare accounts under FRS 105, the reporting standard written for them. In practice that means:
- a much shorter set of accounts, with no requirement for a directors’ report
- no fair value or revaluation accounting, so less to work out
- a balance sheet with only a handful of line items
- the option to send Companies House the balance sheet alone, so your profit and loss account stays off the public register
Small companies that are not micro-entities report under FRS 102 Section 1A, which is more demanding but still well short of a full set.
What changes in 2028
The last of those advantages is going. Under the Economic Crime and Corporate Transparency Act, from 1 April 2028 micro-entities and small companies must file a profit and loss account with Companies House. There will be an option to keep it off the public register, and Companies House has said it will confirm how that works nearer the time.
Two other changes land at the same time. Abridged accounts are abolished, and every company must file its accounts in iXBRL format using commercial software, whether it files itself or through an agent. Companies House WebFiling and paper filing both close for accounts on 31 March 2028.
The date moved once already, from April 2027, so it is firm rather than immovable.
Why the old thresholds still matter
One place the old figures are still doing real work is CATO, HMRC’s free filing service, which closed on 31 March 2026.
CATO’s eligibility was pinned to the micro-entity rules as they stood before April 2025: turnover of no more than £632,000, a balance sheet total of no more than £316,000, and 10 employees or fewer. That gap matters because it is now possible to be comfortably a micro-entity under today’s rules and never to have been eligible for CATO. A company turning over £900,000 is a micro-entity now and would have been too large for CATO then.
So if you are working out whether you were a CATO user, test yourself against £632,000 and £316,000, not against the figures above.
How to check which you are
- Take the turnover, balance sheet total and average employee number from the financial year you are filing for.
- Check whether that financial year began before or on or after 6 April 2025, and use the matching set of thresholds.
- See which category you meet two of three conditions for.
- Check you have met them for two consecutive years, unless this is your first financial year.
A few company types are excluded from the small and micro regimes regardless of size, including public companies, companies in certain regulated sectors such as banking and insurance, and most members of a group that is not itself small. If any of those apply, size alone does not settle it.
Frequently Asked Questions
When did the thresholds change?
They apply to financial years beginning on or after 6 April 2025. Turnover and balance sheet thresholds rose by roughly 50 per cent across every category. The employee thresholds did not change.
Do I have to meet all three conditions?
No. You need to meet at least two of the three for the category.
Can my company change size from one year to the next?
Generally only after two consecutive years of meeting the new category’s conditions. The exception is a company’s first financial year, where one year is enough.
Does being a micro-entity change my Corporation Tax?
No. Size determines how you report, not what you owe. Corporation Tax is worked out from your taxable profits in the same way whatever size you are.
Will I still be able to keep my profit and loss account private?
Not in the same way. From April 2028 micro-entities and small companies must file a profit and loss account with Companies House. An option to keep it off the public register is expected, and the detail has not yet been confirmed.
If your company was filing through CATO before it closed, our guide to what to do now HMRC’s free service has gone covers the new filing route, the deadlines and the penalties.
About DataTracks
DataTracks is a software and services provider for regulatory reporting, working with businesses in more than 25 countries since 2005.
DTracks Limited is recognised by HMRC as an iXBRL Managed Tagging Service provider and as a commercial software supplier supporting Pillar 2 returns, and by Companies House as an authorised software provider for filing company accounts.
