Companies Act 2006, section 382

Companies qualifying as small: general

Part 15 Accounts and reports

(1)A company qualifies as small in relation to its first financial year if the qualifying conditions are met in that year.

[F275 (1A)Subject to subsection (2), a company qualifies as small in relation to a subsequent financial year if the qualifying conditions are met in that year.F275]

[F276 (2)In relation to a subsequent financial year, where on its balance sheet date a company meets or ceases to meet the qualifying conditions, that affects its qualification as a small company only if it occurs in two consecutive financial years.F276]

(3)The qualifying conditions are met by a company in a year in which it satisfies two or more of the following requirements—

1. Turnover[F277 Not more than £15 millionF277]
2. Balance sheet total[F278 Not more than £7.5 millionF278]
3. Number of employees Not more than 50

(4)For a period that is a company's financial year but not in fact a year the maximum figures for turnover must be proportionately adjusted.

(5)The balance sheet total means the aggregate of the amounts shown as assets in the company's balance sheet.

(6)The number of employees means the average number of persons employed by the company in the year, determined as follows—

(a)find for each month in the financial year the number of persons employed under contracts of service by the company in that month (whether throughout the month or not),

(b)add together the monthly totals, and

(c)divide by the number of months in the financial year.

(7)This section is subject to section 383 (companies qualifying as small: parent companies).

Read section 382 in the full Act → Definitions (3) Cases (4)

Definitions used in section 382

company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
qualified

“qualified”, in relation to an auditor’s report, means that the report does not state the auditor’s unqualified opinion that the accounts have been properly prepared in accordance with this Act;

Defined in s.474(1) · see it in the full Act
turnover

“turnover”, in relation to a company, means the amounts derived from the provision of goods and services ..., after deduction of—

(a)

trade discounts,

(b)

value added tax, and

(c)

any other taxes based on the amounts so derived;

Defined in s.474(1) · see it in the full Act

Cases considering section 382 (4)

The All-Party Parliamentary Group on Fair Banking Group, R (on the application of) v The Financial Conduct Authority

[2025] EWHC 525 (Admin) · 7 March 2025

The Companies Act thresholds were used as the source of the quantitative criteria in the Sophistication Test. The court accepted that the FCA could rationally regard such criteria as a proxy for sophistication in an urgent negotiated redress scheme, despite their imprecision. (see paras [30], [32], [135], [147]-[152])

JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd

[2017] EWCA Civ 267 · 11 April 2017Defines

Defines the small-company category used in identifying an eligible company for the CVA moratorium regime. (see para [31])

Abdulrida & Ors v Al-Najar & Ors

[2021] EWHC 398 (Ch) · 24 February 2021Defines

Section 382 was used to identify the companies qualifying as small companies for the purpose of assessing the accounts and the turnover representation. (see para [155])

What each judgment says about section 382 is in the case-law panel in the full Act.

Amendments and notes

8 notes from legislation.gov.uk

Amendments

  1. F275S. 382(1A) inserted (with effect in accordance with reg. 2(2) of the amending S.I.) by The Small Companies (Micro-Entities' Accounts) Regulations 2013 (S.I. 2013/3008), regs. 2(1), 4(2)(a) (with reg. 3)
  2. F276S. 382(2) substituted (with effect in accordance with reg. 2(2) of the amending S.I.) by The Small Companies (Micro-Entities' Accounts) Regulations 2013 (S.I. 2013/3008), regs. 2(1), 4(2)(b) (with reg. 3)
  3. F277Words in s. 382(3) table substituted (6.4.2025) by The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (S.I. 2024/1303), regs. 1(2), 9(1)(a) (with regs. 2(2), 3)
  4. F278Words in s. 382(3) table substituted (6.4.2025) by The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (S.I. 2024/1303), regs. 1(2), 9(1)(b) (with regs. 2(2), 3)

Modifications

  1. C543Ss. 380-414 applied (with modifications) (1.10.2009) by S.I. 2009/2436, regs. 3-5, Sch 1 para. 10 (with reg. 7, Sch. 2) (and the said Sch. 1 para. 10 is amended (with application in accordance with reg. 1(3) of the amending S.I.) by The Unregistered Companies (Amendment) Regulations 2013 (S.I. 2013/1972), regs. 1(2), 2(2)(a))
  2. C545Ss. 381-384 applied (with modifications) (1.10.2008) by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008 (S.I. 2008/1911), reg. 5 (as amended: (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2013/2005, regs. 1(1), 3(2) (with reg. 1(5)(6)); (with effect in accordance with reg. 2(2)-(5) of the amending S.I.) by S.I. 2016/575, regs. 2(1), 5; (E.W.S.) (1.10.2018) by S.I. 2018/1030, regs. 1(2), 31(2); (31.12.2020) by S.I. 2019/685, reg. 1(2), Sch. 1 para. 58(2) (with reg. 1(3)-(8), Sch. 1 para. 65) (as amended by S.I. 2020/335, regs. 1, 3, 4 and S.I. 2020/523, regs. 1(2), 22, 25(c); 2020 c. 1, Sch. 5 para. 1(1)); (N.I.) (6.4.2022) by S.R. 2022/121, regs. 1, 31(2); (N.I.) (3.10.2022) by S.R. 2022/234, regs. 1, 31(2)); (N.I.) (1.4.2023) by S.R. 2023/59, regs. 1, 31(2); (N.I.) (29.9.2023) by S.R. 2023/148, regs. 1, 31(2)(a)(b); (N.I.) (27.3.2024) by S.R. 2024/78, regs. 1, 31(2)); (6.4.2025) by S.I. 2024/1303, regs. 1(2), 2(2), 11(2)(3)
  3. C546Ss. 382, 383 modified (with effect for the tax year 2021-22 and subsequent tax years) by 2003 c. 1, s. 60C(2) (as inserted by Finance Act 2020 (c. 14), Sch. 1 paras. 5, 24 (with Sch. 1 paras. 30-34))
  4. C547S. 382(4)-(6) applied (with modifications) (1.4.2025) by The Clean Heat Market Mechanism Regulations 2025 (S.I. 2025/81), regs. 1(1), 9(5)(a)