Invest 2035: Audit threshold changes to take place by the end of this year

On October 14th, Jonathan Reynolds, Secretary of State for Business and Trade, announced the UK’s ambitious ‘Invest 2035: The UK’s Modern Industrial Strategy’ through a newly published Green Paper.

At the heart of this strategy is a vision for sustainable, inclusive, and resilient growth, aiming to boost productivity, drive regional development, and foster a robust pro-business environment. In addition to laying out a roadmap for sector-specific policies and regional empowerment, Reynolds’s announcement highlighted transformative reforms to company law and reporting standards, offering immediate cost-saving benefits to businesses across the UK.

Audits and thresholds: major changes for businesses

One of the standout features of the Invest 2035 strategy is the government’s commitment to modernising the UK’s audit and reporting framework, a move anticipated to save UK businesses approximately £240 million annually. Reynolds confirmed that new legislation would be introduced by the end of the year to raise the monetary thresholds for micro, small, and medium-sized entities.

Originally scheduled for October 1^st 2024, this change was delayed due to recent transitions in government, but the new timeline ensures that these critical adjustments will soon benefit companies across the country. Now around 132,000 companies will be eligible to shift into smaller reporting categories, benefiting from lighter and more proportional reporting requirements.

These updated thresholds are a major step in reducing administrative burdens on UK companies, allowing them to allocate resources toward growth and innovation. By eliminating redundant reporting requirements and aligning reporting obligations with company size, the government aims to create a regulatory environment that is not only simpler but better suited to the needs of a dynamic economy.

Streamlined auditing: supporting business growth

The modernisation of audit requirements aligns with the government’s broader mission of fostering growth and making the UK a top destination for international investment. Technical adjustments to the UK’s audit framework are being introduced to ensure auditing standards remain relevant and manageable, particularly for smaller businesses. By right-sizing audit obligations, these changes aim to support the government’s goal of achieving the highest sustained growth among G7 nations.

Looking ahead, Reynolds’s department has planned an extensive consultation in 2024 to further simplify the UK’s non-financial reporting framework. The consultation will examine additional reforms, including updates to shareholder communication using modern technology and the potential for virtual AGMs, making business reporting even more efficient and accessible.

A pro-business environment for the future

These updates underscore the UK’s commitment to creating a thriving pro-business environment. By tackling regulatory inefficiencies and cutting unnecessary costs, ‘Invest 2035’ positions the UK as an attractive place for both domestic and international business. Alongside broader strategies to support high-potential growth sectors and regions, this reporting reform is a vital part of Reynolds’s vision for a modern, competitive UK economy.

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