Raised Audit Exemption Thresholds Are Reshaping UK Audit Portfolios: What Comes Next for Practices.

MYCPE ONE outlines how UK accounting firms can protect audit margins, redeploy capacity, and build advisory revenue as more clients fall out of statutory audit scope

LONDON, United Kingdom, [October 07, 2026] – The UK’s raised company size thresholds are changing the shape of audit portfolios across the country. For financial years beginning on or after 6 April 2025, a company can generally claim audit exemption as a small company if it meets two of these three tests: turnover of £15 million or less (up from £10.2 million), a balance sheet total of £7.5 million or less (up from £5.1 million), and no more than 50 employees. Government estimates suggest around 132,000 entities move into a smaller size band.

For UK accounting and audit practices, the effect is now visible in client portfolios. Mid-tier audit clients that once provided steady, recurring fees are reassessing whether they still need an audit. Practices face a choice: absorb the lost revenue, or reshape their audit and assurance model.

MYCPE ONE, a provider of offshore staffing and continuing education for accounting professionals, believes the firms that do well will treat this as a capacity reset, not just a revenue loss.

What the Threshold Changes Mean for UK Audit Portfolios

The uplift of roughly 50% across micro, small, and medium thresholds has three direct effects on practices:

• Fewer mandatory audits in the lower mid-market. Companies that sat just above the old £10.2 million turnover line can now often claim exemption under Section 477 of the Companies Act 2006.

• Audit work moving up-market. The medium-sized band now runs to £54 million turnover and £27 million balance sheet. Remaining statutory audits are larger and more complex, with higher documentation and quality-management demands.

• More voluntary and non-statutory assurance. Exemption does not end demand for assurance. Lenders, grant providers, investors, and shareholders holding 10% or more of shares can still require an audit. Many clients will also want limited-scope reviews or agreed-upon procedures instead.

There is also a timing factor. The FRS 102 amendments, effective for periods beginning on or after 1 January 2026, bring most operating leases onto the balance sheet. For some lease-heavy clients, this could push gross assets back toward the £7.5 million threshold, making size reassessment an annual task rather than a one-off check.

What Comes Next for UK Practices

MYCPE ONE recommends that UK firms act on four priorities over the next 12 to 18 months:

1. Re-map every audit client against the new thresholds. Confirm size classification, group status, and any contractual or shareholder audit requirements before engagement letters are renewed.

2. Repackage assurance for exempt clients. Convert lost statutory audits into voluntary audits, independent reviews, or lender-focused assurance where there is a commercial case.

3. Redeploy senior auditors to higher-value work. Use freed partner and manager time on larger audits, advisory, transaction support, and ESG or sustainability readiness.

4. Rebuild the delivery model. With lower audit volume but higher complexity per file, fixed in-house team costs become harder to justify. A flexible blend of onshore reviewers and offshore audit staff lets firms scale capacity up or down without carrying idle headcount.

How Offshore Audit Support Fits the New Model

As audit portfolios shrink at the lower end and grow in complexity at the top, many UK firms are turning to offshore audit professionals for:

• Audit file preparation, working papers, and documentation under ISAs (UK)

• Substantive testing, vouching, and sample selection

• Financial statement drafting under FRS 102 Section 1A and full FRS 102

• Review-ready files that UK managers and Responsible Individuals can sign off

MYCPE ONE supports UK practices with offshore auditing and assurance services. Offshore professionals trained in UK audit standards and practice software work as an extension of the firm’s in-house team, while engagement-level responsibility stays with the UK firm. This allows practices to keep margins on remaining audits and move partner time into advisory.

About MYCPE ONE

MYCPE ONE supports accounting and finance professionals worldwide through continuing professional education and offshore staffing services. Its offshoring division provides dedicated accountants, bookkeepers, tax preparers, payroll specialists, and auditors to firms in the UK, US, and Canada, with data security and compliance controls built into every engagement. 

Media Contact

Nemin Vora, 

Content & Media Manager, MYCPE ONE

+1 646-827-4348

nemin.vora@my-cpe.com