The government has announced changes to a series of SME regulations – but what does that mean for your business?

Announced as part of a wider package of business reforms, the government has announced that the number of employees used to define SMEs has changed.

Rising from 50-249 to 499 the change means that, according to government calculations, up to 40,000 more businesses are now classed as SMEs.

• What does this mean for SMEs?

By reclassifying businesses of 250 to 499 employees as SMEs the government is reducing the number of regulations they must follow.

The newly reclassified businesses will now no longer have to comply with certain existing corporate governance and reporting requirements, and will also apply to laws currently under development.

• Why are they making these changes?

Previously, in line with EU regulations, the UK government has defined an SME as having fewer than 250 employees – but after leaving the EU, the UK can now set its own definition.

Government research also suggests that the cost and time spent by SMEs complying with business regulations was too great, and was stopping businesses from investing in and working towards growth.

• What are the government saying about these changes – and what will they mean for employees?

Announcing the reforms the government said that they form a “first step in a package of reforms to ensure UK business regulation works for the UK economy” to enable firms to streamline operations by making compliance with regulations easier, cheaper, and more efficient.

The government says the reforms “will be applied in a proportionate way to ensure workers’ rights and other standards will be protected.”

• Will the government expand these changes to more businesses?

While the changes currently only affect those businesses of 250 to 499 employees, the government is to monitor the impact of the changes and, if successful, they plan to extend the regulation exemption to businesses of up to 1000.