What is a small company for Companies House purposes?
Answered 17 March 2026
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What is a Small Company for Companies House Purposes?
The definition of a "small company" for Companies House purposes is set out in Part 15 of the Companies Act 2006, primarily in sections 381–384.
What the law says
The Small Companies Regime
The small companies regime applies to a company for a financial year in which the company (a) qualifies as small (under ss.382 and 383) and (b) is not excluded from the regime (under s.384).
The Qualifying Conditions (s.382)
A company qualifies as small if it satisfies at least two of the following three requirements in a financial year:
| Requirement | Threshold |
|---|---|
| Turnover | Not more than £15 million |
| Balance sheet total | Not more than £7.5 million |
| Number of employees | Not more than 50 |
Key rules on timing:
- A company qualifies as small in its first financial year if the conditions are met in that year.
- For subsequent years, a change in status (meeting or ceasing to meet the conditions) only takes effect if it occurs in two consecutive financial years.
- For a period that is a financial year but not in fact a year, the maximum turnover figure must be proportionately adjusted.
- "Balance sheet total" means the aggregate of the amounts shown as assets in the balance sheet.
- "Number of employees" means the average number employed under contracts of service, calculated monthly and divided by the number of months in the year.
Parent Companies (s.383)
A parent company qualifies as small only if the group it heads also qualifies as a small group. The group-level qualifying conditions are met if the group satisfies at least two of:
| Requirement | Threshold |
|---|---|
| Aggregate turnover | Not more than £15 million net (or £18 million gross) |
| Aggregate balance sheet total | Not more than £7.5 million net (or £9 million gross) |
| Aggregate number of employees | Not more than 50 |
The same two-consecutive-years rule applies to groups.
Companies Excluded from the Small Companies Regime (s.384)
Even if the size thresholds are met, the small companies regime does not apply to a company that was at any time within the relevant financial year:
- A public company;
- An authorised insurance company, banking company, e-money issuer, MiFID investment firm or UCITS management company, or a company carrying on insurance market activity, or a scheme funder of a Master Trust scheme; or
- A member of an ineligible group.
A group is ineligible if any of its members is a traded company, a body corporate whose shares are admitted to trading on a UK regulated market, a person (other than a small company) with Part 4A FSMA permission to carry on a regulated activity, an e-money issuer, a small company that is an authorised insurance company/banking company/MiFID investment firm/UCITS management company, a person carrying on insurance market activity, or a scheme funder of a Master Trust scheme.
Micro-entities
A sub-category of small company is the micro-entity, which qualifies if it meets at least two of: turnover not more than £1 million; balance sheet total not more than £500,000; and not more than 10 employees.
HMRC guidance / practice
HMRC guidance (in the context of the off-payroll working rules, Chapter 10 Part 2 ITEPA 2003) confirms that companies excluded from the Small Companies Regime by section 384 Companies Act 2006 would not be considered small for those purposes.
Citation sources
e period for filing its accounts for the first financial year has ended. If a company is small in its first year, then it would need to be medium or large-sized for two consecutive years before being considered medium or large-sized for the purposes of Chapter 10, Part 2 ITEPA 2003. EXAMPLES Example 1 Company A incorporates on 1 April 2021. The company’s financial year ends on 31 March 2022, so the end date for the period for filing its accounts is 31 December 2022. The first tax year starting a
Part 15 Accounts and reports Chapter 1 Introduction Companies subject to the small companies regime Companies excluded from the small companies regime 384 1 The small companies regime does not apply to a company that ... 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, a MiFID investment firm or a UCITS management company, or ii carries on insurance market acti
Part 15 Accounts and reports Chapter 1 Introduction Companies subject to the small companies regime Companies subject to the small companies regime 381 The small companies regime . . . 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).
Part 15 Accounts and reports Chapter 1 Introduction Companies subject to the small companies regime Companies qualifying as micro-entities 384A 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 balan