When does a company need an audit? It sounds like a simple query, yet for many medical partnerships, charity finance teams and purpose-driven SMEs, the answer sits at the heart of governance, funding and growth. An audit is more than a stamp from an external accountant – it is an independent opinion that your financial statements give a true and fair view. For lenders, donors, regulators and partners, that opinion underpins trust.
From 6 April 2025 the statutory audit thresholds rise sharply for the first time in almost a decade, lifting thousands of companies out of mandatory audit. The Government estimates that around 132,000 businesses will become exempt under the new limits (Department for Business and Trade estimate, 2024). At the same time, recent Office for National Statistics data shows that 89.6 % of UK firms employ fewer than ten people (ONS, 2024) – a reminder that most enterprises will never cross the audit line in the first place.
Yet statutory limits are only one part of the picture. Shareholder demands, sector regulation and grant conditions can all switch the spotlight back on your accounts. The rest of this article explains the 2025/26 rules, highlights other common triggers and outlines what to do if you remain, or choose to stay, within audit scope.
The 2025/26 audit thresholds at a glance
For financial years beginning on or after 6 April 2025 your company must have an audit if it meets any two of the three criteria below for two consecutive years:
- Turnover: Over £15 million
- Balance-sheet total: Over £7.5 million
- Average employees: More than 50
(See the legislation summary on GOV.UK)
If you sit below two of those limits you are normally a “small company” and can claim audit exemption. Remember the group rule – the thresholds apply to the worldwide group, not just the UK entity.
When does a company need an audit: Triggers beyond the thresholds
Size is not the only test. You will still need an audit if any of these apply:
- Public interest entities: Listed companies, banks, insurers and other PIEs are always audited.
- Sector regulation: Charities with income above £1 million or assets over £3.26 million and income over £500,000 must commission an audit under the Charities Act. Pension schemes, solicitors’ client money and CQC-regulated care groups have similar rules.
- Shareholder request: The Companies Act lets shareholders holding at least 10% of voting rights demand an audit – a frequent clause in shareholders’ agreements.
- Articles of association: Some companies hard-wire an audit requirement, typically to reassure incoming investors.
- Grant or loan covenants: NHS contracts, Innovate UK grants and many bank facilities specify audited accounts as a condition of funding.
- Group audits: You may be below the threshold individually, yet still be audited because the parent company needs group-wide assurance.
Benefits of a voluntary audit
If the thresholds say you can drop your audit, should you? Our experience across healthcare, not-for-profit and owner-managed businesses suggests three reasons to keep it:
- Stronger credibility: Independent verification reassures commissioners, donors and suppliers and can sharpen your competitive edge when bidding for contracts.
- Early risk detection: Audit work often uncovers process gaps – for example weak payroll approvals or GDPR-sensitive data inside accounting backups – before they become costly problems.
- Better finance discipline: An annual audit timetable forces robust year-end close procedures and accurate management reporting, helping partners run the practice with fewer surprises.
Getting ready if you still fall within scope
If you expect to exceed the new limits – or you choose a voluntary audit – preparation is half the battle:
- Year-end timetable: Agree deliverables and dates with us six months before the period end.
- Systems walk-through: Make sure key controls (bank reconciliations, stock counts, practice income logs) are documented.
- Related-party register: Keep an up-to-date list of directors’ and partners’ interests to avoid late disclosure headaches.
- Quarterly reviews: Reconcile key balances – debtors, creditors, fixed assets – throughout the year rather than waiting until year-end.
- Communication plan: Tell staff what auditors will need so they can set aside time and documents.
What next for your reporting obligations
Regulatory thresholds rise – but accountability never disappears. Understanding when does a company need an audit remains essential whether you are scaling a medical group, steering a charity or running a family-owned manufacturer. Map your figures against the new limits, review any contractual or sector rules, and decide early whether the reassurance of a voluntary audit still supports your goals.
If you are unsure about when a company needs an audit, talk to us. Our specialist team will review your numbers and obligations and provide clear, actionable advice.
