What good looks like
A business turning over about £5 million
At about £5 million, a business may have its own finance team and a senior person responsible for finance. Its turnover is still well inside the audit exemption limit, but staff numbers and assets can change that.
The short answer
A company turning over about £5 million is under the £15 million turnover test for audit exemption, but whether it needs an audit depends on all three tests and on things like being a subsidiary. Beyond the law, we would expect a monthly reporting pack, a budget and forecast that the owners use to make decisions, documented financial controls, and someone senior responsible for finance, part-time or full-time. That is our judgement, built on published guidance.
What support a business this size may have
| Kind of support | What a business this size may have | Basis |
|---|---|---|
| Bookkeeping and systems | An in-house finance team or an outsourced one, with records kept daily, a set month-end routine, and systems for purchase orders, sales invoicing and payroll. VAT records kept digitally. | Legal requirement (digital VAT records). Our judgement (team and systems). |
| Accounts, tax and VAT | Annual accounts, Corporation Tax and VAT returns, payroll and pension filings. An audit if the company does not qualify for exemption, or if shareholders ask for one. | Legal requirement |
| Monthly management information | A monthly reporting pack: management accounts, key measures such as how long customers take to pay, cash position, an updated forecast and a commentary. | Published guidance (ICAEW on budgets and key ratios)1. Our judgement (contents of the pack). |
| Planning and cash forecasting | A yearly budget agreed by the owners or board, and a rolling cash forecast compared with actual results each month. | Published guidance (ICAEW)1 |
| Financial controls and approvals | Written approval limits for spending and payments, duties split between different people, and regular checks of bank, customer and supplier balances. | Our judgement |
| Finance leadership | A senior person responsible for finance: a financial controller, or a finance director, part-time or full-time. They attend owners' or board meetings to present the figures. | Our judgement |
| Specialist support | Tax advice beyond annual returns, help with group structures if there is more than one company, and sector or overseas experience where relevant. | Our judgement |
See what a monthly reporting pack can contain for more on the pack.
What changes from about £2 million
On our £2 million page, the question was whether anyone looks ahead at all. At about £5 million, we assume someone does, and the questions become different:
- Who is responsible for finance? At £2 million this could still be the owner with an accountant's help. At £5 million we would expect a named senior person, though not necessarily a full-time finance director.
- Is the pack used? Monthly figures are only useful if the owners read them and act on them. A short commentary and a forecast update help with that.
- Are controls written down? With more staff spending money, the rules on who can approve what need to be clear to everyone, not only known to the owner.
The legal points at this turnover
- Audit. A private company can be exempt from audit if it meets at least two of three tests: turnover of no more than £15 million, assets worth no more than £7.5 million, 50 or fewer employees on average, for financial years starting on or after 6 April 2025.2 A £5 million company passes the turnover test, so it needs to pass only one of the other two. It would need an audit on size only if it fails both, for example if it has more than 50 employees on average and assets over £7.5 million.
- Audits that apply whatever the size. Some companies must be audited anyway, such as public companies (unless dormant) and some subsidiaries. Shareholders who own at least 10% of shares can ask for an audit, in writing, at least one month before the financial year ends.2
- Small company accounts. The small company limits are turnover of £15 million or less, £7.5 million or less on the balance sheet and 50 employees or less, two of three needed.3 These limits apply to financial years starting on or after 6 April 2025.4
- VAT. Registration is required once total taxable turnover for the last 12 months goes over £90,000.5
If you are not sure whether your company needs an audit, ask your accountant.
What else matters as much as turnover
- Staff. A business near 50 employees is close to one of the audit and small company tests.
- Borrowing and investors. A lender or investor may set its own reporting requirements, such as monthly management accounts or covenant figures.
- More than one company. A group of companies brings extra accounts and tax work, and each company's size and audit position is worth checking with your accountant.
- A business with few staff and simple trading, such as a wholesaler with one product line, may need much less than the table describes.
About this standard
This describes what a business of about this turnover may have. It is a working assumption from published guidance, not a survey average, and not a rule your accountant must follow. How our standards work.
Sources
- ICAEW, "Managing your business" (Find a Chartered Accountant, help with your business). icaew.com. Checked 12 October 2026.
- GOV.UK, "Audit exemptions for private limited companies". gov.uk/audit-exemptions-for-private-limited-companies. Checked 12 October 2026.
- GOV.UK, annual accounts guidance, "Micro-entities, small and dormant companies". gov.uk/annual-accounts/microentities-small-and-dormant-companies. Checked 12 October 2026.
- The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303), regulations 2(2) and 9. legislation.gov.uk. Checked 12 October 2026.
- GOV.UK, "Register for VAT: when to register". gov.uk/vat-registration/when-to-register. Checked 12 October 2026.