A consultation on ‘Simpler corporate reporting’ considers amending the scope of the company size definitions. This aims to benefit up to 43,000 medium-sized companies and 2,000 large companies. These are separate proposals to the Companies Act changes already announced for implementation in October 2024.

Companies 1

A way to reduce the regulatory burden on companies is to amend the scope of the company size definitions. 

This Department of Business & Trade consultation covers proposals to:

  • Uplift the medium-sized company employee threshold from up to 250 employees to up to 500.
  • Exempt medium-sized companies from the requirement to produce a Strategic Report.

Employee threshold proposals

Some businesses in sectors that tend to have high numbers of casual or part-time employees, such as in the hospitality sector, have expressed to the government that the current employee threshold is an issue for them when it comes to corporate reporting.

  • A 500-employee threshold would also align with the employee threshold at which companies can claim Enhanced Relief for R&D-intensive small and medium-sized enterprises (SMEs).
  • It would mean around 2,000 more large companies are categorised as medium-sized.

Strategic Report exemptions

All medium-sized companies are currently required to provide some basic disclosures in a Strategic Report. These are:

  • A fair review of the company’s business.
  • A balanced and comprehensive analysis of the company’s development, performance in the year and its position at the end of the year.
  • A description of the principal risks and uncertainties facing the company.
  • An analysis using financial key performance indicators.

Responses to the Call for Evidence (2023) suggested there were too many disclosures and reporting requirements on medium companies and they were too burdensome.

  • Investors have reported that they do not make significant use of this information for medium-sized private companies to justify the costs of their production.
  • The feedback the government has received indicates that the shareholders of private medium-sized companies are often close to the business (such as family, friends, or sophisticated outside investors who enjoy a direct relationship with company management) and may therefore get limited benefit from the Strategic Report.

The government proposes exempting medium-sized private companies from having to prepare a Strategic Report but would welcome evidence as to any unidentified costs and benefits of doing so before it makes a final decision.

Providing a reporting exemption could benefit between 41,000 and 43,000 companies.

Consultation questions

  1. Do you agree or disagree with the uplift of the employee threshold from 250 to 500 employees for ‘medium-sized’ companies? Please explain your answer.
  2. Do you agree or disagree with exempting medium-sized private companies from having to prepare a Strategic Report?  Please explain your answer.
  3. Please provide any evidence you have regarding the usefulness of the information medium-sized private companies provide to their shareholders or other stakeholders in their Strategic Reports.

Respond online at: https://ditresearch.eu.qualtrics.com/jfe/form/SV_2ocaRod5X8Wdl6C

or Email to: This email address is being protected from spambots. You need JavaScript enabled to view it.

Useful guides on this topic

What is a small or medium-sized company?
What is an SME? What size is a small company under the Companies Act? What size is a micro company? What size are Medium and Large companies?

Companies House: What's New 2024
Companies House has new powers under the Economic Crime and Corporate Transparency Act to query information provided to its Register. Accountants should review their client's registered details to ensure that they comply accordingly.

Checklist Small Company accounts: Companies House requirements
Filing obligations are due to change in 2024 under the Economic Crime and Corporate Transparency Act 2023: the timetable is uncertain. Up until then, the 2016 filing obligations for small and micro-entities apply. They have existed since 2016 and the withdrawal of the FRSSE and the introduction of new reporting standards FRS101, FRS102 and FRS105.

External links

Non-financial reporting review: simpler corporate reporting