If you run a company in the UK, you might have come across the term 'statutory audit' and wondered whether it applies to you. This guide is designed to cut through the jargon and help you answer the key question: Does your business need a statutory audit?
We'll walk through what a statutory audit is, when it's required under UK law, which companies are exempt, and what you should do next.

What is a Statutory Audit?

A statutory audit is an annual legal requirement for certain UK companies under the Companies Act 2006, particularly section 475. It's an independent check of your financial statements that confirms your accounts are fair, accurate, and supported by proper records.
In other words, it's there to give reassurance to anyone relying on your accounts, from shareholders and lenders to regulators and potential investors.

When is a statutory audit required?

Despite the value derived from undertaking a statutory audit, perhaps fortunately you'll be pleased to learn that the majority of small and medium-sized enterprises don't require one.
The government sets "size thresholds" to decide who qualifies for audit exemption. For financial years beginning on or after 6 April 2025, your company is usually exempt if it meets two out of these three criteria:

• Turnover of £15 million or less

• Assets of less than £7.5 million

• 50 or fewer employees on average

These thresholds increased in April of this year; therefore, more businesses will fall below them and will not automatically require a statutory audit.
In practice, though, if your business exceeds two of these limits for two consecutive years, then you will usually require an audit. You may also need an audit if you are in certain industries-banking and insurance, for instance-or if you form part of a large group, regardless of size.

So, it is worth keeping an eye on your figures each year if you are approaching either of the thresholds, speaking with an accountant if you are unsure.

The Benefits of an Audit (and Why a Voluntary One May Be Worthwhile)

While many business owners see audits as just another compliance cost, they can actually bring many benefits, even when you're not legally required to have one.
An audit-whether statutory or voluntary-provides an independent check on your accounts, helping a company to spot potential issues early and increase confidence in financial reporting. It can also uncover inefficiencies or risks that might otherwise go unnoticed.
If yours is a growing company, an audit will help you demonstrate credibility to investors, lenders, and potential buyers by showing that your figures are accurate and your systems sound. It might also be reassuring for customers and suppliers that you are running a financially sound operation.

What to Do Next

If you are unsure whether you require a statutory audit, here are just a few simple steps:
 

Check your company size: Compare your latest figures against the thresholds above.
Look at your company type: Are you part of a larger group, or do you operate in a regulated sector, such as banking or insurance? These can affect your exemption.
Think ahead: Growth can push you over the limits faster than you think; plan ahead if you expect your figures to rise. Decide if you could benefit from a voluntary audit: Even though you may be exempt, an audit can be a good tool in that it provides you with sharper financial insight, improved credibility, and better relations with lenders or investors.

Seek guidance:

Book a consultation with TAXVAT team to confirm your position and help you plan the next steps with confidence. In Summary A statutory audit might sound daunting, but in reality, it is just a legal safeguard designed to protect your business and those who rely on its accounts. Whether you need one mainly depends on your size and structure-if your business is growing, then it is worth double-checking your status every year. Whether you need help confirming whether or not you require a statutory audit, arranging a voluntary audit, or even reviewing your internal procedures,

TAXVAT chartered accountants also there to help. Our experts will guide you throughout the process, ensuring that you fulfill all requirements of the law and making it as simple and trouble-free as possible. Please take a look at our auditing services page or get in touch with any queries you may have.

Visit: https://taxvatreturn.co.uk

Email: info@taxvatreturn.co.uk

Call: 01284 332375