Speak to our audit specialists
If you are unsure whether your company needs an audit, or whether an audit could be beneficial for lenders, investors, or business planning, please get in touch and we will be happy to review your position.
How do you know if your business requires an audit?
Not every UK limited company needs a statutory audit. Most smaller companies qualify for audit exemption, but it is important to understand the rules, as an audit may still be required in certain situations.
For financial years starting on or after 6 April 2025, a company is generally audit exempt if it qualifies as a small company by meeting at least two of the following conditions:
• Annual turnover of no more than £15 million
• Balance sheet total (gross assets) of no more than £7.5 million
• Average number of employees of no more than 50
If a company exceeds these limits for the first time, it will not usually lose audit exemption straight away. In most cases, the company must exceed the thresholds for two consecutive financial years before the exemption is lost.
However, some companies must have an audit regardless of size. The most common instances include public companies, subsidiary entities (unless qualifying for exemption) and certain regulated businesses, such as banks, insurance companies, and some investment firms. There are various other company-types that also must be audited.
An audit may also be required if the company’s shareholders request one. Shareholders holding at least 10% of any class of shares, or 10% of voting rights, or 10% in number of members, individually or collectively, can demand an audit. This request must be made in writing and be received at least one month before the end of the financial year that the audit is being asked for. Older companies, particularly those formed under Companies Act 1985 and before may include a specific requirement for audit, regardless of size, in their Articles of Association if they have not been updated.
Charity audit requirements
Charitable companies are subject to different rules and often face lower thresholds for mandatory audits. For example, a charity may require an audit once its gross income exceeds £1 million, depending on its circumstances.