Audit exemptions changes in 2012 are estimated to have brought about millions of pounds worth of savings for SMEs
- changes to audit exemptions in 2012 are estimated to have brought about millions of pounds worth of savings for small and medium-sized enterprises
- reforms mean less red tape for small businesses and take-up is expected to increase further following additional eligibility changes in 2016
- in total, savings for small businesses were estimated at £4.6b billion in 2015
Research published today (17 January 2017) by the Department for Business, Energy and Industrial Strategy found that changes to the small companies audit exemption rules by the government in 2012 led to an estimated £4.6 billion in savings for small and medium-sized businesses (SMEs) in 2015.
More than a million small businesses are exempt from audit, which is leading to individual savings of thousands of pounds per year.
The poll of 400 small businesses affected by the changes found that three out of four SMEs undergoing audits felt they would benefit from exemptions, while 80% cent of firms strongly agree that taking up audit exemptions helps reduce burdens for small businesses.
Newly eligible SMEs that were polled overwhelmingly felt they had benefited from the changes, saying they had saved money and time because of the reforms. However, the research also shows that despite the success of the rule changes, only 30% of newly eligible SMEs are currently taking advantage of audit exemptions.
Business Minister Margot James said:
“We are committed to making the UK the best place in Europe to start and grow a business. That means supporting SMEs and removing unnecessary burdens to their growth, including by reducing regulation.”
“By increasing the number of businesses exempt from audit, more SMEs are now able to reinvest in their businesses, increase cash flow and repay debts as a result of exemption take-up.”
“The number of businesses saving money from the new audit exemptions is already huge and I would encourage those who haven’t signed up to do so as soon as possible.”
Since restructuring the small companies audit exemption in 2012, companies and limited liability partnerships have not been required by law to undergo audits if they meet just 2 of the following criteria:
- fewer than 50 employees
- an annual turnover of no more than a maximum amount (now £10.2 million)
- assets worth no more than a maximum (now £5.1 million)
This replaced previous rules where often all three criteria had to be met.
There are a record 5.5 million small businesses across the country, responsible for around half of all private sector employment. Recent research from the Federation of Small Businesses showed an increase in confidence, exporting and job creation in the UK’s small firms at the end of 2016.