What is changing?

With effect from 6 April 2025, the Companies Act 2006 will be amended by The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 to change the figures in the tables for “turnover” and “balance sheet total” for micro-entities, small and medium-sized companies, and to increase the entries for “aggregate turnover” and “aggregate balance sheet total” in respect of small and medium-sized groups.  The position will also change for LLPs.  

Effect on sponsor licences 

These changes are relevant when a company applies for a sponsor licence in order to sponsor non-UK and non-Irish nationals in the UK. Where an organisation is considered small (or is a charity) the sponsor licence application fee is £536 but will rise to £574 on 9 April 2025. For a medium or large sized company the application fee is currently £1,476 but will be rising to £1,579 on 9 April.

The size of a company also dictates the level of the Immigration Skills Charge that is payable when the organisation sponsors an individual under the sponsorship regime. This is set at the lower figure of £364 per year of the visa (i.e. £1,820 for a five-year visa) for a small company or charity but rises significantly to £1,000 per year of the visa (i.e. £5,000 for a five-year visa) for a medium or large sponsor.

How do I know if I qualify as a smaller company and therefore pay a lower sum?

The qualifying conditions require that a company or group does not exceed two out of three thresholds. One threshold involves its number of employees, and that threshold remains the same at 50. The other two thresholds are annual turnover and balance sheet total, and they are both changing as follows:

• Pre 6 April 2025: Annual turnover: not more than £10.2m turnover and not more than £5.1m balance sheet total;
• Post 6 April 2025: Annual turnover: not more than 15 million and not more than £7.5m balance sheet total.  

Duty on sponsor to report change of size

Importantly, sponsor licence holders are also under a duty to report when their organisation size or charitable status changes – for example where the company was a small company but is now a medium sized company (and vice-versa).  This notification must be submitted within 20 working days of the change of size. It’s important therefore that this information is relayed to those in charge of the sponsor licence quickly.

Effect on financial reporting

The government guidance on which companies may benefit from size-related audit exemptions has been updated to reflect the new regulations coming into force. The higher thresholds mean that some companies which were previously “medium” may now be considered “small” so find themselves eligible for an audit exemption under section 477 of the Companies Act 2006. However, note that companies reporting for periods commencing prior to 6 April 2025 will not be able to apply the changes until the following financial year. For further information on the financial reporting implications of the changes, see the resources compiled by the Financial Reporting Council here.