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Audit threshold raised to £5.6 million for SMEs


The UK Department of Trade and Industry yesterday announced that the audit threshold for small companies is to be raised from £1 million to £5.6 million annual turnover. Turnover limits defining small and medium-sized companies will also be raised.

Until now, companies with an annual turnover of more than £1 million have been obliged to have their accounts audited each year. But following yesterday's announcement by Patricia Hewitt, Secretary of State at the DTI, an additional 69,000 companies will be exempted from this requirement.

The increase in the level of the threshold from £1 million to £5.6 million annual turnover is expected to save companies a total of around £94 million a year, according to the DTI.

Ms Hewitt also announced that the Government is raising the turnover limit that defines small and medium-sized companies. It will mean that more companies will be able to take advantage of tax incentives on ICT equipment and plant and machinery.

The new limits will be £5.6 million turnover for small companies (not more than 50 employees) and £22.8 million turnover for medium-sized companies (not more than 250 employees).

The changes are expected to come into force in January 2004.

Patricia Hewitt said:

"This change will cut costs and lighten the regulatory burden on these businesses. More companies will be able to decide for themselves whether to undertake an audit of their business."

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