ESOS Phase 4 compliance guide

Employee test — 250 or moreTest A (either/or)

Employs 250 or more people in the UK (including group subsidiaries and associates) on 31 December 2026. The employee test alone is sufficient — the financial tests are not also required. Either Test A or Test B qualifies an undertaking 6.

Financial test — both thresholds requiredTest B (both must apply)

Annual turnover above £44 million AND balance sheet total above £38 million. Both financial thresholds must be exceeded together. Exceeding only one is not sufficient for the financial test. Note that many practitioners still cite the original euro amounts (€50m / €43m) from the 2014 regulations — the GOV.UK guidance uses the equivalent GBP figures 1.

Group aggregation ruleExtends scope significantly

If any single UK entity in a corporate group meets either threshold, the entire UK group is in scope for ESOS 10. The qualification test applies at the highest UK parent level. A small subsidiary with fewer than 250 employees is included within the parent's ESOS compliance scope. An undertaking continues to qualify until it fails the test for two consecutive accounting periods 6.

ESOS vs SECR — different thresholdsCross-reference

Unlike SECR's Companies Act two-of-three test (£36m turnover / £18m balance sheet / 250 employees), ESOS uses different criteria, meaning organisations can qualify for one scheme but not the other 11. Check both independently. The Environment Agency 5 estimates approximately 9,000 UK organisations currently qualify for Phase 4.

Need help selecting? Our ESOS lead assessor guide explains qualifications, how to write a brief, typical fees, and the difference between the six approved registers.

ESOS Phase 4 requirements — full listWhat compliance demands

Phase 4 requires qualifying organisations to: (a) confirm scope against the 250-employee or £44m/£38m thresholds on 31 December 2026; (b) audit at least 95% of total energy consumption across buildings, transport and industrial processes; (c) obtain lead assessor sign-off unless 100% ISO 50001 certified or below 40,000 kWh; (d) document progress against Phase 3 action plan commitments, with explanations for any unmet actions; (e) obtain board director review and sign-off on the assessment; (f) prepare a new action plan setting out intended follow-up; (g) submit compliance notification via MESOS by 5 December 2027.

ESOS compliance guidance — primary sourcesWhere to find official guidance

GOV.UK ESOS guidance is the canonical source for Phase 4 compliance guidance. The Environment Agency operates the MESOS notification system and publishes operational guidance on lead-assessor approval and submission. The CIBSE, ESTA and Energy Institute publish practitioner guidance supplementing the official material.

ESOS qualification criteria — summaryWho is in scope for Phase 4

An undertaking qualifies for ESOS Phase 4 if, on 31 December 2026, it meets the large undertaking test: more than 250 UK employees, OR annual turnover above £44 million AND balance sheet total above £38 million. UK groups apply the test at consolidated parent level. A qualifying entity retains ESOS obligations until it fails the test for two consecutive accounting periods.

ESOS compliance guide — what this page coversFull Phase 4 walkthrough

This ESOS Phase 4 compliance guide covers: qualification test on 31 December 2026, energy coverage threshold (95%), three compliance routes (energy audit, ISO 50001, combined), lead assessor selection from approved registers, action plan preparation, Phase 3 progress documentation, and Environment Agency notification. For other ESOS deadlines across all phases, see our ESOS deadlines guide.