Companies Act 2006, Cross Heading: Companies subject to the small companies regime is up to date with all changes known to be in force on or before 04 September 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.
Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.
Whole provisions yet to be inserted into this Act (including any effects on those provisions):
The small companies regime F1. . . applies to a company for a financial year in relation to which the company—
(a) qualifies as small (see sections 382 and 383), and
(b) is not excluded from the regime (see section 384).
Modifications etc. (not altering text)
C2 Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
(1) A company qualifies as small in relation to its first financial year if the qualifying conditions are met in that year.
[ F2 (1A) Subject to subsection (2), a company qualifies as small in relation to a subsequent financial year if the qualifying conditions are met in that year. ]
[ F3 (2) In relation to a subsequent financial year, where on its balance sheet date a company meets or ceases to meet the qualifying conditions, that affects its qualification as a small company only if it occurs in two consecutive financial years. ]
(3) The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—
| 1. Turnover | [ F4 Not more than £10.2 million ] |
| 2. Balance sheet total | [ F5 Not more than £5.1 million ] |
| 3. Number of employees | Not more than 50 |
(4) For a period that is a company's financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.
(5) The balance sheet total means the aggregate of the amounts shown as assets in the company's balance sheet.
(6) The number of employees means the average number of persons employed by the company in the year, determined as follows—
(a) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),
(b) add together the monthly totals, and
(c) divide by the number of months in the financial year.
(7) This section is subject to section 383 (companies qualifying as small: parent companies).
Modifications etc. (not altering text)
C2 Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
C3 Ss. 382, 383 modified (with effect for the tax year 2021-22 and subsequent tax years) by 2003 c. 1, s. 60C(2) (as inserted by Finance Act 2020 (c. 14), Sch. 1 paras. 5, 24 (with Sch. 1 paras. 30-34))
(1) A parent company qualifies as a small company in relation to a financial year only if the group headed by it qualifies as a small group.
(2) A group qualifies as small in relation to the parent company's first financial year if the qualifying conditions are met in that year.
[ F6 (2A) Subject to subsection (3), a group qualifies as small in relation to a subsequent financial year of the parent company if the qualifying conditions are met in that year. ]
[ F7 (3) In relation to a subsequent financial year of the parent company, where on the parent company’s balance sheet date the group meets or ceases to meet the qualifying conditions, that affects the group’s qualification as a small group only if it occurs in two consecutive financial years. ]
(4) The qualifying conditions are met by a group in a year in which it satisfies two or more of the following requirements—
| 1. Aggregate turnover | [ F8 Not more than £10.2 million net (or £12.2 million gross) ] |
| 2. Aggregate balance sheet total | [ F9 Not more than £5.1 million net (or £6.1 million gross) ] |
| 3. Aggregate number of employees | Not more than 50 |
(5) The aggregate figures are ascertained by aggregating the relevant figures determined in accordance with section 382 for each member of the group.
(6) In relation to the aggregate figures for turnover and balance sheet total—
in the case of IAS accounts, in accordance with [ F10 UK-adopted international accounting standards ] ; and
A company may satisfy any relevant requirement on the basis of either the net or the gross figure.
(7) The figures for each subsidiary undertaking shall be those included in its individual accounts for the relevant financial year, that is—
(a) if its financial year ends with that of the parent company, that financial year, and
(b) if not, its financial year ending last before the end of the financial year of the parent company.
If those figures cannot be obtained without disproportionate expense or undue delay, the latest available figures shall be taken.
Modifications etc. (not altering text)
C2 Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
C3 Ss. 382, 383 modified (with effect for the tax year 2021-22 and subsequent tax years) by 2003 c. 1, s. 60C(2) (as inserted by Finance Act 2020 (c. 14), Sch. 1 paras. 5, 24 (with Sch. 1 paras. 30-34))
(1) The small companies regime does not apply to a company that F11. was at any time within the financial year to which the accounts relate—
(a) a public company,
(b) a company that—
(i) is an authorised insurance company, a banking company, an e-money issuer, [ F12 a MiFID investment firm ] or a UCITS management company, [ F13 or ]
(ii) carries on insurance market activity, or
[ F14 (iii) is a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 [ F15 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 ] (interpretation of Part 1), or ]
(c) a member of an ineligible group.
(2) A group is ineligible if any of its members is—
[ F16 (a) a traded company, ]
(b) a body corporate (other than a company) whose shares are admitted to trading on a [ F17 UK regulated market ] ,
(c) a person (other than a small company) who has permission under [ F18 Part 4A ] of the Financial Services and Markets Act 2000 (c. 8) to carry on a regulated activity,
[ F19 (ca) an e-money issuer, ]
(d) a small company that is an authorised insurance company, a banking company, F20. [ F21 a MiFID investment firm ] or a UCITS management company, [ F22 or ]
(e) a person who carries on insurance market activity [ F23 or ]
[ F24 (f) a scheme funder of a Master Trust scheme within the meanings given by section 39(1) of the Pension Schemes Act 2017 [ F25 or section 39(1) of the Pension Schemes Act (Northern Ireland) 2021 ] (interpretation of Part 1). ]
(3) A company is a small company for the purposes of subsection (2) if it qualified as small in relation to its last financial year ending on or before the end of the financial year to which the accounts relate.
Modifications etc. (not altering text)
C2 Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
(1) A company qualifies as a micro-entity in relation to its first financial year if the qualifying conditions are met in that year.
(2) Subject to subsection (3), a company qualifies as a micro-entity in relation to a subsequent financial year if the qualifying conditions are met in that year.
(3) In relation to a subsequent financial year, where on its balance sheet date a company meets or ceases to meet the qualifying conditions, that affects its qualification as a micro-entity only if it occurs in two consecutive financial years.
(4) The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—
| 1. Turnover | Not more than £632,000 |
| 2. Balance sheet total | Not more than £316,000 |
| 3. Number of employees | Not more than 10 |
(5) For a period that is a company’s financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.
(6) The balance sheet total means the aggregate of the amounts shown as assets in the company’s balance sheet.
(7) The number of employees means the average number of persons employed by the company in the year, determined as follows—
(a) find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),
(b) add together the monthly totals, and
(c) divide by the number of months in the financial year.
(8) In the case of a company which is a parent company, the company qualifies as a micro-entity in relation to a financial year only if—
(a) the company qualifies as a micro-entity in relation to that year, as determined by subsections (1) to (7), and
(b) the group headed by the company qualifies as a small group, as determined by section 383(2) to (7).
Modifications etc. (not altering text)
(1) The micro-entity provisions do not apply in relation to a company’s accounts for a particular financial year if the company F27 . at any time within that year—
(a) [ F28 was ] a company excluded from the small companies regime by virtue of section 384,
(b) [ F29 would have been ] an investment undertaking as defined in Article 2(14) of Directive 2013/34/ EU of 26 June 2013 on the annual financial statements etc. of certain types of undertakings [ F30 were the United Kingdom a member State ] ,
(c) [ F31 would have been ] a financial holding undertaking as defined in Article 2(15) of that Directive [ F32 were the United Kingdom a member State ] ,
[ F33 (d) a credit institution within the meaning given by Article 4(1)(1) of Regulation ( EU ) No. 575/2013 of the European Parliament and of the Council, [ F34 which is a CRR firm within the meaning of Article 4(1)(2A) of that Regulation, ] ]
(e) [ F35 would have been ] an insurance undertaking as defined in Article 2(1) of Council Directive 91/674/EEC of 19 December 1991 on the annual accounts of insurance undertakings [ F36 were the United Kingdom a member State ] , or
(f) [ F37 was ] a charity.
(2) The micro-entity provisions also do not apply in relation to a company’s accounts for a financial year if —
(a) the company is a parent company which prepares group accounts for that year as permitted by section [ F38 399(4) ] , or
(b) the company is not a parent company but its accounts are included in consolidated group accounts for that year. ]