Am I in scope of UK SRS?
A practical decision tree walking through the rules in CP26/5, the Companies Act, and the proposed mandatory framework. UK SRS itself is available for voluntary adoption by any UK entity — the question of mandatory application is jurisdiction-specific.
Last verified 27 July 2026 · Subject to FCA Policy Statement on CP26/5, unpublished as of that date
Outcome categories
The Qualification Date: 31 December 2026
Critical Date
ESOS Phase 4 qualification is assessed at a single point in time — 31 December 2026.
Your organisation's status on this specific date determines whether you're in scope for the entire Phase 4 cycle, regardless of changes before or after.
Why 31 December 2026?
- Gives organisations 11 months to prepare after qualification is confirmed
- Aligns with financial year-end for most UK companies
- Allows time for structural changes and corporate reorganisations
- Provides certainty for procurement of Lead Assessor services
What Happens After Qualification?
- 5 December 2026: Phase 3 Progress Update 2 deadline — a live obligation for organisations that notified in Phase 3
- Throughout 2027: Energy audit must be undertaken with Lead Assessor
- 5 December 2027: Phase 4 compliance notification deadline
- 5 December 2028: Phase 4 Action Plan deadline, covering 6 December 2027 to 5 December 2031
- 5 December 2029, 5 December 2030 and 5 December 2031: Phase 4 progress updates
- Phase 5: Cycle begins again (dates to be confirmed)
These dates are tabulated in the Environment Agency's Phase 4 guidance, published 30 July 2026.
The third progress update is new in Phase 4, added by SI 2026/701 regulation 28.
The Two Qualification Routes
| Test | Threshold | Scope | Calculation | Notes |
|---|---|---|---|---|
| Employee Test | 250 or more employees | Total UK group employment | All UK subsidiaries and parent company | Qualifies on its own, regardless of the financial figures |
| Turnover Test | More than £44 million | Annual turnover (revenue) | Most recent annual accounts period | Must be exceeded in conjunction with balance sheet test |
| Balance Sheet Test | More than £38 million | Annual balance sheet total | Most recent annual accounts period | Must be exceeded in conjunction with turnover test |
Route 1: Employee Test You qualify if your UK group employs 250 or more people, regardless of financial thresholds.
Includes all subsidiaries under common control.
Route 2: Both Financial Tests
You qualify if annual turnover exceeds £44 million AND annual balance sheet total exceeds £38 million,
based on most recent annual accounts.
ESOS thresholds are not the SECR thresholds
Alignment of the ESOS qualification thresholds with SECR was proposed, but the change will not go ahead for Phase 4 — and no Phase 5 commitment to it has been published.
The two regimes do not share a threshold, and any page telling you they do is wrong.
SECR uses a two-of-three test at £36m turnover / £18m balance sheet / 250 employees; ESOS uses the higher and differently structured test above.
Group Aggregation Rules
Critical Principle
If any single UK entity in your group meets the thresholds, the entire UK group becomes subject to ESOS.
This applies even if other group companies are individually sub-threshold.
What Counts as a Group?
- Parent-subsidiary relationships: Companies where another company holds more than 50% of voting rights
- Controlling influence: Where a company can direct operating and financial policies
- Common control: Multiple entities under the same ultimate parent company
- UK scope only: Only UK-incorporated entities count for ESOS aggregation
The "Responsible Undertaking"
- Single entity responsibility: One group company becomes the "responsible undertaking" for ESOS compliance
- Group-wide coverage: The responsible undertaking must ensure energy audits cover the entire UK group
- Designation flexibility: Groups can choose which entity serves as responsible undertaking
- Legal liability: The designated entity bears full legal responsibility for compliance
Recent Acquisitions, Divestments, and Structural Changes
Acquisitions: Companies acquired before 31 December 2026 count toward qualification thresholds.
Include in employee count, add to financial thresholds, must be included in energy audit scope.
Historical energy data may be limited.
Divestments: Companies sold before 31 December 2026 do not count toward qualification.
Exclude from employee count, remove from financial thresholds, no audit requirement for divested entities.
May affect overall qualification status.
Reorganisations: Internal restructuring may change qualification without affecting the underlying business.
May create or remove ESOS obligations.
Consider timing relative to 31 December 2026.
Legal entity structure affects aggregation.
Seek advice before major changes.
ISO 50001 Alternative Route (Total or Significant Coverage)
How long UK SRS S2 implementation actually takes
Companies waiting for the FCA Policy Statement to begin preparation are already late. Practitioner consensus puts end-to-end implementation at twelve to eighteen months — driven by Scope 3 data, which can't be compressed.
Last verified 27 July 2026 · Click any workstream for detail
From kickoff to first UK SRS S2 report. Driven by Scope 3 supplier engagement and quantitative scenario modelling — neither compressible.
Of Scope 3 data work — from supplier engagement onset through validation. Of the 15 GHG Protocol categories, Category 1 and Category 11 typically account for >70% of total Scope 3 emissions.
Foundation phase before data work meaningfully begins. Materiality assessment and gap analysis are pre-requisites — running data collection without these creates wasted effort.
What the certification has to cover:
- Total or significant consumption: significant means the areas making up at least 95% of total energy consumption, with up to 5% de minimis
- All sites and subsidiaries within the certified scope
- Still notify: ISO 50001 discharges the audit duties, not the notification of compliance
- Current certification: ISO 50001 certificates must be valid at compliance deadline
Hybrid Route (ISO 50001 + Audit):
- Partial coverage: ISO 50001 covers some but not all energy consumption
- Audit remainder: Traditional ESOS audit required for uncovered consumption
- Lead Assessor required: For the audit portion of the compliance approach
- Combined reporting: Single compliance notification covers both routes
Out-of-Scope Cases
Public sector bodies: Central government, local authorities, NHS trusts, public corporations.
Rationale: Separate government energy efficiency initiatives apply.
Sub-threshold organisations: Groups that meet neither the employee test nor both financial tests.
Rationale: Regulatory burden proportionate to organisation size.
Unincorporated entities: Sole traders, general partnerships (with exceptions).
Rationale: Limited legal structure for regulatory obligations.
Dormant companies: Companies with no significant business activity.
Rationale: No meaningful energy consumption to assess.
What to Do This Quarter If You Think You're In Scope (or Unsure)
Immediate Actions (Next 30 Days):
- Group mapping: Identify all UK group companies and their current employee counts
- Financial review: Pull latest annual accounts for turnover and balance sheet figures
- ISO 50001 audit: Check current energy management certifications and coverage scope
- Legal review: Engage legal counsel if group structure changes are being considered
Planning Actions (Next 90 Days):
- Lead Assessor research: Begin identifying qualified advisors and obtaining quotes — and check which approved register they hold. The Institution of Chemical Engineers was removed from the approved registers for ESOS lead assessors on 16 February 2026, so an IChemE-registered assessor needs to show current standing on another approved register
- Energy data audit: Review availability and quality of historical energy consumption data
- Budget planning: Allocate budget for ESOS assessment costs
- Governance setup: Establish project governance and assign internal responsibility
Don't Wait Until December
If you're likely to qualify, start planning now. The market for Lead Assessor services becomes constrained as the deadline approaches,
and energy audits require significant preparation time.