Learn when a company needs an audit in the UK, including legal thresholds, mandatory cases, and voluntary audit benefits.

Understand audit thresholds, legal exemptions, and whether your company must be audited under UK law.

What Is a Statutory Audit?

A statutory audit is an independent examination of a company’s financial statements. It ensures accuracy, transparency, and compliance with accounting standards and the Companies Act 2006. Not all companies are legally required to undergo an audit, but certain thresholds trigger mandatory auditing.

When Does a Company Need an Audit in the UK?

In the UK, a company must have an audit if it does not qualify as “small”, or if specific conditions apply. A company is considered small if it meets at least two of the following:

• Annual turnover: £10.2 million or less
• Balance sheet total: £5.1 million or less
• Average number of employees: 50 or fewer

If your company exceeds two of these thresholds for two consecutive financial years, an audit is legally required.

Companies That Always Need an Audit (Regardless of Size)

Some companies must be audited even if they meet the small company exemption:

• Public Limited Companies (PLCs)
• Companies regulated by a financial authority (e.g. insurance or investment firms)
• Companies involved in banking or e-money services
• Subsidiaries of public companies (unless exempt)
• Companies where shareholders (owning 10%+) request an audit

Group Companies: Additional Considerations

Even if a UK company is small, it may need an audit if it’s part of a group that exceeds the audit exemption thresholds in aggregate. However, parent companies may claim a group audit exemption depending on the overall structure and size.

Voluntary Audits – Are They Worth It?

Some small companies opt for a voluntary audit to improve:

• Credibility with investors or lenders
• Corporate governance
• Internal financial controls
• Readiness for acquisition or expansion

Even if not legally required, a voluntary audit can send a strong signal of transparency and professionalism.

What Happens If You Fail to Comply?

Failing to conduct a required audit is a breach of the Companies Act and can lead to:

• Financial penalties
• Delays in filing accounts
• Damage to business reputation
• Involvement of regulatory bodies

Assess your company’s audit obligations early in the financial year to stay compliant.

Conclusion

If you're asking “when does a company need an audit UK?”, the answer depends on your company’s size, industry, and shareholder structure. Always assess the thresholds carefully, and consult with a qualified accountant when unsure.

At CG Incorporations, we help UK companies understand their statutory obligations, including audit requirements and exemptions.

📞 Contact us today to ensure your company stays compliant and audit-ready.