Disclosing auditor remuneration

Small companies do not have to disclose what they pay their auditor. Medium sized companies must disclose the fee for the audit of their accounts, and larger companies must disclose both the audit fee and fees for other services from the auditor and its associates, analysed into set categories. The rules are in the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008, SI 2008/489, as amended.

Which companies have to disclose auditor remuneration?

The regulations were made under section 494 of the Companies Act 2006, which lets the Secretary of State require disclosure of the services an auditor and its associates provide and the remuneration for them. Since amendments made by SI 2016/649, the position depends on company size:

Company	What must be disclosed	Regulation
Small	Nothing required	Regulation 4 no longer applies to small companies
Medium sized	Fee receivable by the auditor for the audit of the accounts	Regulation 4
Other (large, and those excluded from being small or medium)	Audit fee, plus fees for other services by the auditor and its associates, by category	Regulation 5

ICAEW’s technical release on auditor remuneration (TECH 01/22 FRF) confirms that small companies have not had to disclose auditor remuneration for accounting periods starting on or after 1 January 2016. Size is tested under the Companies Act. A company is medium sized if it meets two of three limits under section 465: turnover not more than £54 million, balance sheet total not more than £27 million and not more than 250 employees. ICAEW notes that a company in a group containing a public company or certain financial services companies cannot qualify as small or medium sized, so it falls under regulation 5 even if its own figures are modest.

A small company that has a voluntary audit, or that is audited because a shareholder asked for one, is still small for this purpose. It can show the fee if it wishes, but the law does not require it. See audit exemption for small companies for when an audit is needed at all.

What counts as remuneration?

Regulation 3 defines remuneration to include payments for expenses and benefits in kind. Where remuneration includes benefits in kind, their nature and estimated money value must also be disclosed. The ICAEW release explains that the figure is the fee for the audit of those particular accounts, regardless of the year in which the work is done or the fee is charged to profit, although adjustments for over or under accruals of earlier audit fees may be included and can be explained if material.

For medium sized companies the audit fee disclosed is only the amount receivable by the auditor itself. For larger companies, an amendment in 2011 extended the audit fee to include amounts receivable by an associate of the auditor.

What must a large company show for other services?

Under regulation 5, fees receivable by the auditor and its associates for other services supplied to the company or its associates must be analysed into the categories in Schedule 2A, introduced by SI 2011/2198:

1. The auditing of accounts of any associate of the company.
2. Audit related assurance services.
3. Taxation compliance services.
4. All taxation advisory services not within category 3.
5. Internal audit services.
6. All assurance services not within categories 1 to 5.
7. Services relating to corporate finance transactions not within categories 1 to 6.
8. All non audit services not within categories 2 to 7.

Separate figures are needed for services to the company and its subsidiaries on the one hand and to associated pension schemes on the other. There is a small exemption: fees for category 8 services from a distant associate of the auditor need not be disclosed if they do not exceed £10,000 or 1% of the auditor’s total audit remuneration for its most recent financial year. ICAEW notes that nil amounts can be left out, but there is no exemption for immaterial amounts.

How does it work in a group?

Group accounts must give the regulation 5 analysis as if the group were a single company, unless the group itself qualifies as small or medium sized and is not ineligible. Under regulation 6(2), the individual accounts of the parent, and of a subsidiary included in the consolidation, need not give the other services analysis if the group accounts are required to give it and the individual accounts say so. Since 2016 a subsidiary can only use this if its statutory auditor is the same as the parent’s.

The audit fee itself must still appear in each company’s own accounts. Where the parent’s auditor issues one invoice for the whole group, ICAEW says the fee has to be apportioned to each UK subsidiary for disclosure even if it is not recharged, and a reasonable approximation is acceptable. Fees paid by subsidiaries to unconnected secondary auditors are not disclosable in the group accounts. More on group structures is on the group audits page.

What if the company changed auditor?

Where more than one person has been appointed auditor for the period, the remuneration of each must be disclosed separately (regulations 4(3) and 5(5)). This commonly happens when an auditor resigns part way through a year or a firm is replaced after a tender. Background on the process is on appointing and removing auditors.

What does a typical note look like?

Illustration only. A large unquoted company with no subsidiaries pays its auditor £60,000 for the audit, £12,000 for corporation tax compliance and £8,000 for tax advice on a property disposal.

Fees payable to the company’s auditor and its associates	2026
Audit of the company’s annual accounts	£60,000
Taxation compliance services	£12,000
Taxation advisory services	£8,000

A medium sized company in the same position would show only the £60,000 line. A small company could show nothing at all. ICAEW says a total for non audit fees is not required, though it may be included.

Are there related disclosures?

Regulation 8 of the same regulations requires a company that has entered into a liability limitation agreement with its auditor to disclose the principal terms and the date of the shareholder resolution approving it, or for a private company the resolution waiving the need for approval. This applies regardless of company size. See auditor liability limitation agreements.

The FRC’s Ethical Standard governs whether the auditor may provide non audit services at all; the accounts disclosure simply makes the amounts visible to shareholders. The independence side is covered on auditor independence.

What mistakes come up?

• Medium sized companies analysing non audit fees. This is not wrong, but it is not required, and including associates’ fees in the audit line overstates the regulation 4 figure.
• Disclosing the amount charged to profit instead of the fee for the audit of these accounts. Accruals can mean the two differ.
• Not apportioning a group fee. A subsidiary with a nil audit fee note because the parent paid is a common error.
• Claiming the subsidiary exemption with a different auditor. After 2016 the exemption needs the same statutory auditor as the parent, and the individual accounts must state that the group accounts give the information.
• Testing size on the company alone. Membership of an ineligible group can make a small looking company subject to the full regulation 5 analysis.

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Related Accountapedia entries

• Disclosure exemptions for medium sized companies
• Company size thresholds: micro, small, medium and large
• LLP accounts: what must be filed
• Staff numbers and staff costs disclosures
• Directors’ remuneration disclosures
• Disclosing secured liabilities in the accounts
• Disclosing political donations in the accounts
• The COP9 outline disclosure explained

Related cover: Professional indemnity insurance for accountants. Ask for a quote or call 01795 841 310.

Sources

• legislation.gov.uk: Act 2006 c. 46, section 494
• legislation.gov.uk: SI 2016/649, regulation 18
• legislation.gov.uk: SI 2008/489, regulation 4
• ICAEW: Tech 01 22 frf auditor remuneration technical release
• legislation.gov.uk: Act 2006 c. 46, section 465
• legislation.gov.uk: SI 2008/489, regulation 3
• legislation.gov.uk: SI 2011/2198, schedule made
• legislation.gov.uk: SI 2008/489, regulation 5
• legislation.gov.uk: SI 2008/489, regulation 6
• legislation.gov.uk: SI 2008/489, regulation 8

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 19 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.