Do I Need a Statutory Audit? A Simple Guide for UK Businesses

If you run a UK company, you may have heard 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 (in particular 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 gained from completing a statutory audit, you may be relieved to hear that most small and medium-sized companies don't need one.

The government sets “size thresholds” to decide who qualifies for audit exemption. For financial years starting 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 worth £7.5 million or less
50 or fewer employees on average

These thresholds rose in April this year, meaning that more companies will now fall below them and won't automatically need a statutory audit.

However, if your business exceeds two of those limits for two years in a row, you'll usually need an audit. And if you're in specific industries (like banking or insurance) or part of a large group, you might need one regardless of size.

So, if you're close to the thresholds, it's worth keeping an eye on your figures each year and speaking with an accountant if you're unsure.

The Benefits of an Audit (and Why a Voluntary One Might 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 (statutory or voluntary) provides an independent check on your accounts, helping you spot potential issues early and strengthen confidence in your financial reporting. It can also uncover inefficiencies or risks that might otherwise go unnoticed.

If you're a growing company, an audit can help demonstrate credibility to investors, lenders, and potential buyers, showing that your figures are accurate and your systems sound. It can also reassure customers and suppliers that you're running a financially stable operation.

What to Do Next

If you're unsure whether you need a statutory audit, here are 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, so plan ahead if you expect your figures to rise.
Decide whether a voluntary audit could benefit you: Even if you're exempt, an audit can still be a valuable tool, offering sharper financial insight, improved credibility, and stronger relationships with lenders or investors.
Ask for advice: Book a consultation with a chartered accountant to confirm your position and help plan next steps confidently.

In Summary

A statutory audit might sound daunting, but it's really just a legal safeguard designed to protect your business and those who rely on its accounts. Whether you need one depends mainly on your size and structure, and if your business is growing, it's worth double-checking your status each year.

If you'd like support with any aspect of auditing, whether that's confirming if you need a statutory audit, arranging a voluntary one, or reviewing your internal processes, our team of chartered accountants at Keith Graham can help. We'll guide you through the process, ensure you meet all legal requirements, and make it as straightforward and stress-free as possible.

Please take a look at our auditing services page or get in touch with any queries you may have.