Overview
In the United Kingdom, Small and Medium Enterprises (SMEs) are classified under two distinct frameworks depending on context. For financial reporting and company registration purposes, size thresholds are set by the Companies Act 2006, as amended by The Companies Regulations 2024, effective for financial years beginning on or after April 6, 2025. For UK public sector procurement, the Procurement Act 2023 (in force February 24, 2025) uses a separate, unified SME definition.
In both frameworks, classification is based on a combination of employee headcount, annual turnover, and balance sheet total. supplier.io applies these definitions when classifying UK-based suppliers under size-based categories.
To qualify for a given tier, a business must meet at least two of the three criteria.
| Category | Employees | Annual Turnover | Balance Sheet Total |
|---|---|---|---|
| Micro SME | Fewer than 10 | ≤ £1 million | ≤ £500,000 |
| Small SME | Fewer than 50 | ≤ £15 million | ≤ £10 million |
| Medium SME | Fewer than 250 | ≤ £54 million | ≤ £27 million |
Note: Companies with turnover between £44 million and £54 million may qualify as Medium-sized under the Companies Act but would not meet the Procurement Act 2023 SME definition (which caps turnover at £44 million) for public procurement purposes.
UK SME Definition — Procurement Act 2023 (Public Procurement)
For UK public sector procurement, the Procurement Act 2023 uses a single, non-tiered SME definition. There is no separate micro/small/medium breakdown — a business either qualifies as an SME or it does not. To qualify, an enterprise must meet the staff threshold AND at least one of the financial thresholds below.
| Criteria | Threshold |
|---|---|
| Staff (FTE) | Fewer than 250 full-time equivalents |
| Annual Turnover | ≤ £44 million |
| Balance Sheet Total | ≤ £38 million |
Micro SME
Micro SMEs are the smallest category of business under UK Companies Act size classification — typically sole traders, partnerships, or very small limited companies operating in a local or niche market. To qualify, a business must satisfy at least two of the following: fewer than 10 employees, annual turnover no greater than £1 million, and a balance sheet total no greater than £500,000.
Micro SMEs are not a separately tracked diversity category in most public procurement frameworks, but they are relevant in UK supplier diversity programs that specifically seek to support the smallest businesses in the supply chain. Micro businesses also qualify as SMEs under the Procurement Act 2023, provided they meet that framework's FTE and financial thresholds.
Small SME
Small SMEs represent the broader small business category and are the most commonly referenced tier in UK procurement and supplier diversity programs. A business qualifies as a Small SME if it meets at least two of the following: fewer than 50 employees, annual turnover no greater than £15 million, and a balance sheet total no greater than £7.5 million.
Note that Micro SMEs are a subset of Small SMEs — a business that qualifies as Micro will also meet the thresholds for Small. In reporting contexts, businesses are typically classified at the most specific tier that applies.
Medium SME
Medium SMEs are larger businesses that still fall below the thresholds for a large company. A business qualifies as a Medium SME if it meets at least two of the following: fewer than 250 employees, annual turnover no greater than £54 million, and a balance sheet total no greater than £27 million.
Medium SMEs are significant participants in UK supplier diversity programs and public sector procurement. They are large enough to handle complex contracts but still classified as SMEs for the purposes of government spend tracking and diversity reporting. Note that the Procurement Act 2023 caps SME turnover at £44 million — meaning businesses with turnover between £44 million and £54 million qualify as Medium-sized under the Companies Act but fall outside the Procurement Act SME definition for public sector procurement purposes.
How supplier.io Sources UK SME Data
supplier.io identifies UK SME status through a combination of sources:
- Companies House — the UK’s official company register, which holds filed accounts and size declarations
- Verified, third-party certification bodies
- Self-reported data submitted through SupplierOne with a signed affidavit
- Firmographic data from authorized data partners.
For questions about how a specific UK supplier has been classified, contact support@supplier.io.