The new thresholds for micro, small, medium, and large businesses are to come into effect on 06th April.
The increase in size thresholds will allow a number of companies to qualify as small or micro. It is estimated around 113,000 companies will now be eligible to move to the micro category from small, around 14,000 to small from medium, and around 6,000 to medium from large.
Although the governments primary aim is to simplify regulatory and business reporting requirements, from an IR35 perspective this is welcomed news for companies in the private sector moving into the small business category, who will now (not yet), fall out of scope of the off-payroll (IR35) rules. With this significant change, former medium sized businesses have the potential to uplock previously hidden talent and specialist skills, without the fear of IR35.
Whilst the new thresholds are coming into effect from August, the benefits won’t be realised immediately. This is because a company qualifies as small for a specific tax year only if the reporting period for a company year end precedes the tax year, so most will have to wait until 2026/27 or even 2027/28 to realise these benefits.
Nonetheless, many will say that this is a step in the right direction as far as the off-payroll (IR35) rules are concerned.
