The July 2025 audit exemption rule change
From 16 July 2025, a small, micro or dormant company loses its audit exemption only if it files its annual return late more than once within five years. Late returns filed up to midnight on 15 July 2025 still require audits for the following two annual returns, under the old rule.
Before 16 July 2025
A single late annual return cost the company its audit exemption for the following two years.
From 16 July 2025
Section 22 of the Companies (Corporate Governance, Enforcement and Regulatory Provisions) Act 2024 replaced section 363 of the Companies Act 2014. Now:
- the first late filing within a five-year period doesn't cost the exemption, though late filing fees still apply
- a second late filing within five years costs the exemption for the following two years
- the company's first annual return isn't counted as a previous late filing
- late filings before 16 July 2025 aren't counted as previous late filings either
Older late filings still matter
The change isn't retrospective. The CRO has confirmed that late annual returns filed up to midnight on 15 July 2025 still require audits for the following two annual returns.
| Situation | Audit needed? |
|---|---|
| Filed late on or before 15 July 2025 | Yes, for the following two annual returns |
| Filed late after 16 July 2025, first time in five years | No, but late filing fees apply |
| Filed late after 16 July 2025, a second time within five years | Yes, for the following two years |
Groups
For small companies in a group, the change doesn't apply: a late filing by one group company still affects the audit exemption across the group. If your company is part of a group, ask us to check.
Last checked 13 November 2026 against CRO and Revenue guidance. This is general information, not legal advice for your company.