When it comes to accounting obligations, many owners question when the "right time" is to begin auditing their business. While HMRC outlines specific thresholds and criteria for when a business is required to conduct an Audit, there are other scenarios when a business may benefit from audit services. Learn more with our guide below from the Shorts Audit Services team.
When is a business required to do an Audit?
An Audit is essential for companies that meet the criteria set out by the government. These can cover the majority of companies that operate in the UK, depending on their turnover, assets, and the number of staff they employ.
What is the Audit threshold for a company?
From 6 April 2025, the UK’s audit thresholds inch upward, quietly widening the net for growing firms. Companies with financial years starting on or after that date must undergo an annual audit if they meet any two of the following:
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Turnover above £15m
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Gross assets over £7.5m
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More than 50 employees
Those starting earlier (and operating outside a group) face slightly lower benchmarks: £10.2m in turnover, £5.1m in assets, and the same 50-employee threshold.
Companies or bodies requiring an Audit regardless of threshold
There are also specific company types which must have an Audit for any financial year in which it has been:
- A public company (excluding dormant public companies)
- A subsidiary
- Any corporate body whose shares have been traded within a regulated market
- A company working in the insurance market, or an authorised insurance company
- A company that issues e-money (electronic money)
- A body that deals in pensions or labour relations
- A company involved in banking
- An organisation whose name appears in the “special register” under the Industrial Relations act 1971
- An organisation that funds a master trust pensions scheme
- An investment firm regulated by MiFID (Markets in Financial Instruments Directive)
- A company regulated by UCTIS (Undertakings for Collective Investment in Transferable Securities)
Companies or bodies which meet any of the above criteria must be audited regardless of whether or not they meet the audit criteria for turnover, assets or people employed. This is why it’s important to seek professional advice from a qualified auditor or legal professional if you are unsure of your audit status.
When to seek advice on your company audit situation
As you can see, the Audit threshold is not obvious for all companies. If your company does not yet conduct an independent Audit, we strongly recommend checking with a qualified auditor or legal professional. It is very important to work with a reputable auditor in order to avoid audit failure.
The Shorts Audit Promise means clients receive provides meaningful advice at a strategic level, as well as assurance and advice relating to compliance with regulations. Speak to our team today if you require assistance.
