Audit Exemption Thresholds 2026: UK and Ireland Rules Explained

Not every company has to have its accounts audited. Many smaller companies in the UK and Ireland can qualify for audit exemption, meaning they're not legally required to have a statutory audit. Understanding how audit exemption works — and its limits — is important for accountants advising smaller businesses. This guide explains what audit exemption is, the kind of criteria involved, the considerations, and why it matters — in clear, plain language. Because the thresholds and rules change over time and differ between the UK and Ireland, always check the current rules in the relevant jurisdiction for specific circumstances. It complements our ACCA Audit and Assurance guide.

What is audit exemption?

Audit exemption allows qualifying companies to be relieved of the legal requirement to have a statutory audit of their financial statements. A statutory audit can be costly and time-consuming, and for many small companies — whose accounts are used by a limited group of people — the law allows them to dispense with it if they meet certain conditions. Being exempt doesn't mean a company can't choose to have an audit (some do, for various reasons), nor does it remove other obligations such as preparing and filing accounts. It simply means a statutory audit isn't compulsory for companies that qualify. Whether a company qualifies depends on meeting the relevant criteria.

The kind of criteria involved

Eligibility for audit exemption typically depends on a company meeting size criteria — broadly, being small enough — usually assessed against measures such as:

• Turnover — below a specified threshold.
• Balance sheet total — below a specified threshold.
• Number of employees — below a specified limit.

Often a company must meet more than one of these conditions to qualify. The specific thresholds and how they're applied are set by law and change over time, and they differ between the UK and Ireland. There can also be additional rules — for example, around groups, and conditions relating to filing and shareholder requests. So the criteria are more nuanced than a single number, which is why checking the current, jurisdiction-specific rules is essential.

When audit exemption may not apply

Even where a company is small, audit exemption doesn't always apply. Certain types of company are excluded from exemption regardless of size — for example, some regulated entities and certain other categories. Group situations can also affect eligibility, as membership of a larger group may remove exemption in some cases. In addition, shareholders holding a certain proportion of the company can sometimes require an audit even where the company would otherwise be exempt. And a company may simply choose to have an audit voluntarily. Because of these exceptions and conditions, qualifying on size alone isn't always enough — the full rules need to be considered.

Should an exempt company still have an audit?

Even when a company qualifies for exemption, having an audit can sometimes be worthwhile. An audit provides independent assurance over the financial statements, which can be valued by lenders, investors, suppliers or other stakeholders, and can support good governance and confidence in the numbers. Some companies choose a voluntary audit, or an alternative form of assurance, for these reasons. Whether it's worth it depends on the company's circumstances — who relies on its accounts, and what they need. For accountants, helping a client weigh the cost of an audit against the benefits of assurance is a useful part of the advice around audit exemption.

Why this matters

Understanding audit exemption matters because it affects whether a company faces the cost and process of a statutory audit, and because getting it wrong — assuming exemption applies when it doesn't — can lead to compliance problems. For accountants advising smaller companies, knowing the current criteria and the exceptions, in the relevant jurisdiction, is valuable. Because the thresholds and rules change and differ between the UK and Ireland, this guide is a general overview only. Always check the current audit exemption rules in the relevant jurisdiction, and seek advice for specific situations, rather than relying on general information alone.

Frequently asked questions

What is audit exemption?

Relief from the legal requirement to have a statutory audit, available to qualifying (generally small) companies — though they must still prepare and file accounts and may choose to have an audit voluntarily.

What criteria determine eligibility?

Typically size criteria such as turnover, balance sheet total and number of employees, often needing more than one to be met. The thresholds change and differ between the UK and Ireland, so check the current rules.

When might audit exemption not apply?

Certain types of company are excluded regardless of size, group membership can affect eligibility, and shareholders holding a certain proportion can sometimes require an audit.

Should an exempt company still have an audit?

Sometimes — a voluntary audit provides independent assurance valued by lenders, investors and others, and supports good governance. Whether it's worthwhile depends on the company's circumstances.

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