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. Was the company dormant for the whole financial year?
A dormant company normally has no significant accounting transactions during the year.
2. Was the company itself excluded from both the small-company and qualifying-subsidiary routes?
This includes a quoted company and the regulated or special bodies excluded by the applicable Companies Act provisions, such as certain insurers, banks, e-money issuers, MiFID investment firms and UCITS management companies. This question concerns the company itself, not merely another member of its group.
3. Is this the company’s first financial year?
First-year status changes how company and group size are assessed, but it does not bypass group eligibility or the separate qualifying-subsidiary exemption.
4. Does the company qualify as small?
Assess the applicable Companies Act size conditions for the relevant financial year.
5. Is the small company part of a group?
A standalone small private company can consider the small-company exemption directly. A group company must also consider the worldwide group conditions, unless it qualifies for a separate subsidiary exemption.
6. Is a qualifying-subsidiary exemption under Companies Act 2006 s479A potentially available?
This route is separate from the small-company exemption. It generally requires the company to be a subsidiary of a qualifying UK parent and the company itself not to be excluded by s479B. Group size does not determine this exemption.
7. Can all qualifying-subsidiary exemption conditions be satisfied?
These include unanimous member agreement for the year, a qualifying UK parent guarantee under s479C, inclusion in the parent’s consolidated accounts, the required note disclosure, audited parent accounts and reports, and delivery of the required documents by the subsidiary’s filing deadline.
8. Does the applicable worldwide group qualify as small?
For the small-company exemption route, assess the entire worldwide group using the group thresholds and the rules applicable to the relevant financial year. First-year status affects that assessment but does not remove it.
9. Was the worldwide group ineligible at any time during the financial year?
Membership of an ineligible group prevents use of the small-company audit exemption. This does not by itself disapply a qualifying-subsidiary exemption already established under s479A.
5. Is the medium/large company a subsidiary for which the s479A route may be available?
A qualifying subsidiary can potentially use the Companies Act 2006 s479A exemption regardless of its own size, provided it has a qualifying UK parent and the company itself is not excluded by s479B.
6. Can all qualifying-subsidiary exemption conditions be satisfied?
These include unanimous member agreement for the year, a qualifying UK parent guarantee under s479C, inclusion in the parent’s consolidated accounts, the required note disclosure, audited parent accounts and reports, and delivery of the required documents by the subsidiary’s filing deadline.
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.
Related checks
Validate the underlying company and group thresholds before relying on a size-based audit 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, unless a dormant-company exception applies
- 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 may be audit exempt, including some dormant public companies, but group membership, regulated status and other statutory restrictions can change the result.
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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