Audit Exemption Thresholds 2026: UK and Ireland Rules Explained

Audit exemption thresholds in both the UK and Ireland moved significantly in 2024–25, and many companies that were audited last year no longer need one — while others assume they are exempt when they are not. For accountants in practice and finance teams deciding whether to keep a voluntary audit, the detail matters.

UK thresholds — the April 2025 uplift

For financial years beginning on or after 6 April 2025, the UK company size thresholds rose by roughly 50%. A company qualifies as small — and is therefore usually audit-exempt — if it meets at least two of the following for two consecutive years:

• Turnover not more than £15 million (previously £10.2 million)
• Balance sheet total not more than £7.5 million (previously £5.1 million)
• Not more than 50 employees (unchanged)

Micro-entity thresholds rose to £1 million turnover and £500,000 balance sheet total, and the medium-sized ceiling moved to £54 million turnover and £27 million balance sheet total. The familiar two-out-of-three, two-consecutive-years machinery still applies, with the usual transitional ability to treat the new thresholds as having applied in the prior year.

Ireland — the 2024 increases

Ireland adopted the EU size-criteria uplift early. For financial years beginning on or after 1 July 2024 (with early adoption permitted back to 1 January 2024), a small company qualifies for audit exemption if it meets two of the following:

• Turnover not more than €15 million
• Balance sheet total not more than €7.5 million
• Not more than 50 employees

One Irish particularity remains a trap: late filing. Losing audit exemption for late annual returns has been a long-standing feature of Irish company law — recent reform has softened it so that exemption is lost only on a second late filing within five years, but the rule still bites and practitioners should check the current position for each client.

Who cannot use the exemption

Size is not the whole story. Audit exemption is generally unavailable — regardless of size — to public companies, banks and insurers, e-money and payment institutions, MiFID investment firms and certain other regulated entities. Group rules matter too: a company in a group qualifies only if the group as a whole meets the small-size criteria, and a UK subsidiary of a larger group may alternatively rely on the parent-guarantee route under section 479A of the Companies Act 2006.

Shareholder rights and voluntary audits

Shareholders holding 10% or more of a company's shares can require an audit in both jurisdictions. And exemption does not mean an audit is a bad idea: lenders, grant bodies, acquirers and major customers frequently demand audited or assured figures. The decision is commercial, not just legal.

What the threshold changes mean in practice

• Newly exempt companies should weigh the saving against stakeholder expectations before dropping the audit — re-instating one later, under deadline pressure, is harder than keeping it.
• Practices face a shrinking statutory audit base at the small end and growing demand for alternatives: assurance reviews, agreed-upon procedures, and stronger accounts-preparation engagements.
• Finance teams should re-run the size test on the new thresholds for each entity in the group — and document the conclusion, including the two-year rule.

Frequently Asked Questions

Do the new UK thresholds apply to my current financial year?

The uplifted thresholds apply to financial years beginning on or after 6 April 2025. For earlier years the previous thresholds (£10.2m / £5.1m / 50) apply.

Can a company in a group claim audit exemption?

Only if the group as a whole qualifies as small, or (in the UK) via the section 479A parent-guarantee route, which has its own conditions and filing requirements.

Does audit exemption remove the need for accounts?

No. Statutory accounts must still be prepared and filed; the exemption only removes the statutory audit requirement.

Can shareholders insist on an audit?

Yes — members holding at least 10% of shares (or any class of them) can require one in both the UK and Ireland.

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