The government is proposing a large increase in the income threshold above which co-operatives and community benefit societies must produce a full audit report.

A consultation from the Treasury proposes increasing the annual income threshold at which a full audit is required from £5.6m to £10.2m and the asset threshold from £2.8m to £5.1m.

The proposals would apply to co-operatives, community benefit societies and mutually-owned businesses run by their members in England, Wales and Scotland.

The umbrella body Co-operatives UK said the proposal would free “a couple of hundred” co-operatives from audit requirements, which can cost between £5,000 and £10,000 a year to complete.

The government said the proposals, which are intended to help co-operatives and community benefit societies compete on a level playing field with companies, would mean that more than 70 per cent of the 7,000 co-operatives in the UK would no longer have to carry out a full audit.

Ed Mayo, secretary general of Co-operatives UK, said: “We are pleased government has heeded calls to remove this unnecessary extra burden on co-operative and community businesses.

“This is a great example of the practical steps government can take to support the UK’s co-operative sector, which plays a key role in fostering a more inclusive economy.”

Stephen Barclay, the economic secretary to the Treasury, said: “From the dairy farm that provides milk to the local community, to the brewery owned by 10 friends who all have a passion for ale, we want to see co-operatives and community benefit societies across the UK thrive and grow.

“That’s why we’re reducing onerous administrative burdens on these societies, saving them money and freeing them up to concentrate on what matters the most – the needs of their members and communities.”

The consultation closes on 22 September.