From 6 April 2025, changes to the definition of a “small company” under the Companies Act 2006 are set to affect the off-payroll working rules in the private sector.
These rules determine whether organisations engaging contractors through intermediaries (like personal service companies) are responsible for assessing and applying PAYE. However, they only apply when certain “gateway” criteria are met, including whether the client is classed as “small”.
So, what’s changed?
The thresholds used to define a “small company” are going up. For accounting periods starting on or after 6 April 2025, a company will be considered “small” and therefore outside the scope of the off-payroll working rules if it meets at least two of the following:
- Annual turnover of £15 million or less (up from £10.2 million)
- Balance sheet total of £7.5 million or less (up from £5.1 million)
- Average number of employees of 50 or fewer (unchanged)
These revised limits will also apply to group companies and other entities.
