A medium sized company gets only a handful of concessions. In Companies Act accounts it can leave out the statement of compliance with accounting standards and narrow the statutory related party note, its auditor fee note covers only the audit fee, and its strategic report can omit non financial KPIs and the section 172 statement. Everything else is full: a complete profit and loss account, cash flow statement, notes, directors’ report, strategic report and, unless exempt, an audit, all filed at Companies House.

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Which companies count as medium sized?

Under section 465 of the Companies Act 2006 a company meets the qualifying conditions in a year if it satisfies two or more of: turnover not more than £54 million, balance sheet total not more than £27 million, and not more than 250 employees on average. These limits apply to financial years beginning on or after 6 April 2025. Turnover is pro rated for a period that is not a year. After the first year, a company qualifies if the conditions are met in the current and preceding year, or if it qualified as medium sized in the preceding year, so one exceptional year does not change its status. A parent company only qualifies if its group is also medium sized, measured on aggregate figures. Companies House sets out the group limits and both sets of thresholds; see also company size thresholds.

Section 467 excludes some companies whatever their size: a public company, a company with permission under Part 4A of the Financial Services and Markets Act 2000, an insurance market business, an e money issuer, a Master Trust scheme funder, and a member of an ineligible group, such as one containing a traded company.

Which disclosures can be left out of the accounts?

Regulation 4 of the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410) applies to a medium sized company preparing Companies Act individual accounts. It gives two concessions:

  • Compliance with accounting standards. Regulation 4(2A) disapplies paragraph 45 of Schedule 1, which otherwise requires a statement of whether the accounts have been prepared in accordance with applicable accounting standards, with particulars of and reasons for any material departure.
  • Related party transactions. Regulation 4(2B) modifies paragraph 72 so that the statutory requirement covers only transactions not concluded under normal market conditions with owners holding a participating interest in the company, companies in which the company has a participating interest, and the company’s directors.

Companies preparing accounts under UK adopted international accounting standards are outside regulation 4, because it applies only to Companies Act accounts.

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Does the related party concession help under FRS 102?

Usually not much. FRS 102 is the accounting standard, and its Section 33 applies to every entity using it. Paragraph 33.9 requires disclosure of the nature of each related party relationship and of transactions, outstanding balances and commitments, with no carve out for transactions on normal market terms, and paragraph 33.10 requires that information by category of related party. Paragraph 33.1A removes the requirement only for transactions between wholly owned members of a group. A medium sized company that wants its accounts to comply with FRS 102 therefore ends up giving fuller related party disclosure than company law alone would demand. The detail is in related party disclosures.

The paragraph 45 concession is similar in practice. Many medium sized companies still state compliance with FRS 102, because the auditor’s report and users of the accounts expect to see the framework identified.

What does the auditor fee note need to show?

Regulation 4 of the Companies (Disclosure of Auditor Remuneration and Liability Limitation Agreements) Regulations 2008 (SI 2008/489) requires a small or medium sized company to disclose only the remuneration receivable by its auditor for auditing the accounts, including the nature and estimated value of any benefits in kind. Larger companies must also analyse fees for other services supplied by the auditor and its associates under regulation 5. A medium sized company does not need to break down tax, assurance or other fees in its notes.

What can be left out of the strategic report?

A medium sized company must prepare a strategic report, because the exemption in section 414B is only for companies entitled to the small companies regime. Two concessions apply:

  • Section 414C(6) says the business review need not comply with section 414C(4) so far as it relates to non financial information, so analysis using non financial key performance indicators, such as environmental and employee measures, can be left out. Financial KPIs are still needed where necessary to understand the business.
  • Section 414CZA(2) disapplies the requirement for a section 172(1) statement for a company that qualifies as medium sized; see the section 172 statement.

Companies House guidance notes that a government announcement on 21 October 2025 said legislation is being prepared to exempt medium sized private companies from producing a strategic report at all, and to remove the directors’ report for all companies. Until that legislation is made, the current requirements apply. See strategic report requirements.

What must be filed at Companies House?

Section 445 requires the directors of a medium sized company to deliver the annual accounts, the strategic report, the directors’ report and, unless the company is exempt from audit, the auditor’s report. Companies House states that a medium sized company must deliver all of the component parts of its accounts.

The old option to file abbreviated accounts has gone. Section 445(3) used to let a medium sized company deliver a profit and loss account starting from gross profit and without the turnover analysis, under regulation 4(3) of SI 2008/410. Both provisions were omitted by the Companies, Partnerships and Groups (Accounts and Reports) Regulations 2015 for financial years beginning on or after 1 January 2016. Companies House guidance still mentions a slightly reduced profit and loss account by reference to regulation 4, but the current text of that regulation contains only the paragraph 45 and paragraph 72 concessions, so preparers should check the legislation before relying on any filing reduction.

What does a medium sized company not get?

  • No Section 1A. The reduced presentation and disclosure regime in FRS 102 is for small entities only; see FRS 102 Section 1A.
  • A cash flow statement. Paragraph 3.17 of FRS 102 includes a statement of cash flows in a complete set of financial statements, and paragraph 7.1B exempts only small entities. A subsidiary that is a qualifying entity can use the reduced disclosure framework exemption in paragraph 1.12(b) if the conditions are met.
  • An audit. The small companies audit exemption is not available. A subsidiary may still use the parent guarantee exemption in section 479A, and a dormant company may qualify under section 480.
  • Off balance sheet arrangements. Section 410A requires both the nature and business purpose and the financial impact of material arrangements; the relief from giving financial impact in section 410A(4) is only for the small companies regime.
  • Group accounts. Companies House states that a medium sized parent must prepare group accounts and deliver them.

How does it work in practice?

Illustration only. A private trading company has turnover of £40 million, a balance sheet total of £20 million and 180 employees in both this year and last year, and is not part of an ineligible group. It is medium sized. Its FRS 102 accounts include a full profit and loss account, balance sheet, cash flow statement, statement of changes in equity and notes. Its notes disclose the audit fee only, and its related party note follows Section 33 in full. Its strategic report uses financial KPIs such as gross margin and cash conversion but no non financial KPIs, and contains no section 172 statement. Everything is filed with the auditor’s report.

What mistakes come up most often?

  • Assuming medium sized companies can still file abbreviated accounts.
  • Dropping the cash flow statement on the basis that the company is not large.
  • Relying on the narrower legal related party rule while claiming full compliance with FRS 102.
  • Treating a company as medium sized when its group exceeds the limits or is ineligible.
  • Including a section 172 statement or non financial KPIs only because a template did, without deciding whether the exemption should be used.

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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.