Accounts referenceLast updated 1 January 1970

Small company exemption filings explained

TL;DR

Most UK private companies file under the small company exemption — abridged, unaudited, no P&L on the public record. From 6 April 2025 the thresholds are turnover £15m, balance sheet total £7.5m and 50 employees (any two). Understanding what's exempt tells you what to ask for directly.

The thresholds (2024/25 uplift)

Two of three, for two consecutive years.

Bracket	Turnover	Balance sheet total	Employees
Micro-entity	≤ £1m	≤ £500k	≤ 10
Small	≤ £15m	≤ £7.5m	≤ 50
Medium	≤ £54m	≤ £27m	≤ 250

What actually disappears from the file

Under the small company regime, the public-facing accounts (the "filleted" version) are stripped of anything that would let a competitor infer profitability:

The profit and loss account (P&L).
Most of the accounting notes (segmental, related-party transactions, key employee remuneration).
The strategic report.
Audit report (audit isn't required in the first place).

What you do get: the balance sheet, called-up share capital, average number of employees (a required note even at small level), and a shortened directors' report.

What you can still infer

Solvency — shareholders' funds and net current assets/liabilities.
Growth — year-on-year movement in retained earnings hints at profit.
Size — average employees, sometimes rounded but revealing.
Debt structure — creditors falling due within one year vs after more than one year.

How to get to profit if you really need it

Small filers give shareholders the full set — including the P&L — but they don't have to give it to Companies House. If you're a buyer or serious supplier, request the "unfilleted statutory accounts" directly. Any refusal is a signal.

Alternatively, ask for the last 12 months of management accounts. Most small businesses can produce these. If they can't, that itself is diligence information.

The audit exemption

Small companies aren't required to be audited. That has two consequences for readers:

The numbers are directors' declarations, not audited assertions.
Shareholders holding 10%+ can still demand an audit — worth remembering if you're taking a minority equity stake.

Small isn't always small (group accounting)

If a company is part of a group, the size test applies to the group as a whole. A modest-looking subsidiary sitting under a large parent doesn't qualify for the exemption — and if it's filing as small, that's a red flag worth checking with the parent's accounts.

Frequently asked questions

What is the small company exemption?

A set of relaxations in Companies Act 2006 that let smaller UK companies file abridged, unaudited accounts and skip the strategic report. Thresholds updated in 2024: two of three — turnover £15m, balance sheet total £7.5m, employees 50.

Which companies qualify?

Two of the three criteria must be met for the current year (and the previous year, unless it's the first year of trading). Some regulated sectors are excluded — banks, insurers, public companies.

What's the practical difference for readers?

You lose the profit and loss account, most notes, and the strategic report. You still get a balance sheet and directors' report — enough to check solvency, but not enough to see profitability.

Is 'small' the same as 'micro-entity'?

No. Micro-entity is a tighter bracket inside small (thresholds: two of three — turnover £1m, balance sheet £500k, 10 employees). Micro accounts (FRS 105) are even more limited than small (FRS 102 Section 1A).

Do small companies need an audit?

No, provided they qualify as small under the exemption and aren't in an excluded category (public interest entity, regulated sector, part of a group over threshold).

Can a shareholder demand an audit?

Yes. Members holding at least 10% of any class of shares can require an audit for the year.

Do small companies file a strategic report?

No — they're exempt. Only the directors' report is required, and even that is abridged.

How long do the thresholds apply?

The 2024 uplift (turnover £15m from £10.2m, balance sheet £7.5m from £5.1m) applies to accounting periods starting on or after 6 April 2025. Earlier periods use the old thresholds.

Does the small company exemption mean the company is small?

Legally yes. But under group accounting rules, a parent's small status depends on the group as a whole. A £5m turnover subsidiary of a £200m parent doesn't get the exemption.

Can I still find profit for a small filer?

Sometimes — creative reading of the balance sheet (movement in retained earnings + dividends declared in the directors' report) approximates profit. It's an estimate, not a fact.

Is 'filleted accounts' the same as small exemption?

Filleted accounts are the version filed with Companies House — they omit the P&L and some notes even from what shareholders see. Small filers can 'fillet' the public version. Members get the full small-company set; the public gets the filleted extract.

What does this mean for diligence?

You need to ask for management accounts or unfilleted statutory accounts if you want profitability. A small filer that refuses is telling you something — either they don't have the numbers or they don't want you to see them.

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