Does my company need an audit? UK audit exemption rules

Most UK private limited companies do not need an audit. A company is exempt if it qualifies as small, which means meeting at least two of three tests: annual turnover of £15 million or less, assets of £7.5 million or less, and 50 or fewer employees on average. Some types of company can never use the exemption, and group companies must pass the tests as a whole group.

Which companies qualify for audit exemption?

A company qualifies if it is small under section 477 of the Companies Act 2006. The thresholds rose for financial years beginning on or after 6 April 2025, as GOV.UK’s audit exemption guidance confirms.

You need to meet two of the three. A company with £20 million turnover but £4 million of assets and 30 staff still qualifies.

Which companies must always have an audit?

Some companies are excluded whatever their size. Section 478 removes the small company exemption from any company that, at any time in the year, was:

• a public company
• an authorised insurance company or carrying on insurance market activity
• a banking company
• an e-money issuer
• a MiFID investment firm or a UCITS management company
• a scheme funder of a master trust pension scheme
• a special register body or an employers’ association

GOV.UK also lists corporate bodies whose shares are traded on a regulated market. A company must have an audit too if its articles of association require one.

How do the rules work for groups?

A parent or subsidiary can only use the small company exemption if the group is small. Under section 479, the group must qualify as small under section 383 and must not be an ineligible group at any time in the year.

The section 383 group limits, effective from 6 April 2025, are:

Net figures are after consolidation adjustments; gross figures are before. A group must meet two of the three.

Can a subsidiary skip its audit with a parent guarantee?

Yes. Section 479A exempts a subsidiary of a UK parent from auditing its individual accounts, whatever its size, if all of these are met:

1. Every member of the subsidiary agrees to the exemption for the year.
2. The parent gives a guarantee under section 479C for the subsidiary’s liabilities at the year end.
3. The subsidiary is included in the parent’s audited consolidated accounts.
4. The parent’s accounts disclose that the subsidiary is using the exemption.
5. By the filing date, the directors send Companies House the members’ agreement, the parent’s guarantee statement, the consolidated accounts, the auditor’s report and the parent’s annual report.

Are dormant companies exempt from audit?

Usually, yes. Section 480 exempts a company that has been dormant since formation. It also exempts a company dormant since the end of the previous year, if it qualifies for the small companies regime (or would but for being public or in an ineligible group) and does not have to prepare group accounts. See what is a dormant company.

Can shareholders force an audit?

Yes. Under section 476, members holding at least 10% of the shares, by number or value, can require an audit. GOV.UK says the request must be in writing, sent to the registered office, and arrive at least one month before the end of the financial year in question. Members can act alone or together.

What must the balance sheet say?

An exempt company must include a directors’ statement on its balance sheet. Section 475 requires it to say that:

• the company is entitled to the exemption
• the members have not required an audit under section 476
• the directors acknowledge their responsibilities for accounting records and accounts

The statement must sit above the director’s signature. From April 2028, Companies House will require a strengthened eligibility statement from every company claiming an exemption, as part of its April 2028 filing changes, announced on 23 October 2026.

Which applies to you?

• If you are a standalone private company under two of the limits, you can claim the small company exemption.
• If you are in a group, check the group totals against the section 383 limits, not just your own.
• If you are a UK subsidiary over the limits, consider the section 479A parent guarantee route.
• If you are dormant, the section 480 exemption usually applies.
• If you are public, regulated or your articles require it, you need an audit.

What to do now

1. Check turnover, assets and headcount against the thresholds.
2. Read your articles for any audit requirement.
3. Make sure the section 475 statement is on your balance sheet.
4. Diarise your filing date with our filing deadline calculator.

Our guides to abridged vs full accounts and micro-entity accounts cover what to file. For reported plans to widen the exemption, see audit exemption for medium-sized companies.

Frequently asked questions

What turnover does a company need an audit at?

A private company needs an audit once it fails two of the three small tests: for years from 6 April 2025, turnover over £15 million, assets over £7.5 million and more than 50 employees.

Does a small company in a group need an audit?

Only if the group is not small. The whole group must meet the section 383 limits and must not be an ineligible group.

Can shareholders demand an audit of a small company?

Yes. Members with at least 10% of the shares can require one by writing to the registered office at least one month before the year end.

Do dormant companies need an audit?

Usually not. A dormant company is exempt under section 480 if it has been dormant since formation, or since the previous year end and it qualifies for the small companies regime.

What statement goes on the balance sheet of an unaudited company?

The directors must state that the company is exempt from audit, that members have not required one, and that they acknowledge their responsibilities for the accounts. It goes above the director’s signature.