Audit exemption lets a qualifying company, usually a small company, a dormant company or a guaranteed subsidiary, file accounts without having them audited. The directors confirm the exemption in a statement on the balance sheet.
Who qualifies
- Small companies (section 477): those meeting at least two of turnover up to £15 million, balance sheet total up to £7.5 million and 50 or fewer employees, for financial years beginning on or after 6 April 2025. For financial years beginning before 6 April 2025 the limits are turnover up to £10.2 million, balance sheet total up to £5.1 million and 50 or fewer employees.
- Subsidiaries (section 479A): where the UK parent guarantees the subsidiary’s liabilities.
- Dormant companies (section 480).
Public companies and some regulated businesses cannot claim the small companies exemption.
When an audit is still needed
Members holding at least 10% of the nominal share capital, or of any class of shares, can demand an audit (for a guarantee company, 10% of the members). The demand must reach the registered office no later than one month before the year end.
The statement
The balance sheet must say the company is entitled to exemption, that members have not required an audit, and that the directors acknowledge their responsibilities for the accounts. From 1 April 2028 an enhanced statement will be required.
Read more: Audit exemption for small companies and micro-entities.
