UK-registered businesses are a year closer to major changes affecting how their accounts should be prepared and filed.
These changes stem from The Financial Reporting Standard applicable in the UK and Republic of Ireland (amendments to FRS 102) in 2024, and the Economic Crime and Corporate Transparency Act 2023 (ECCTA). Separate legislation will change company size thresholds and simplify reporting for thousands of companies.
What’s changing and how can BKL help you to prepare?
FRS 102 changes
The Financial Reporting Council (FRC) proposed a number of significant amendments to FRS 102 in its 2024 Periodic Review. These were formally incorporated into an updated version of FRS 102 published in September 2024.
These changes will bring FRS 102 into line with International Financial Reporting Standards (IFRS) in a number of areas. The most notable are accounting for revenue and lease arrangements.
We have more detail about the changes here.
The effective date for most amendments is periods beginning on or after 1 January 2026. The only amendment effective earlier (periods beginning on or after 1 January 2025) relates to Supplier Financing arrangements.
It is essential that businesses begin assessing the impact of the amendments in readiness for the effective date.
Next steps: FRS 102 impact assessment and planning
For companies most affected by these changes, there will be implications beyond the level of the financial statements. Companies will need to:
- Evaluate the impact on systems and data requirements, and overall finance processes
- Consider the impact on key metrics, profitability, tax, debt covenants and employee performance related schemes
Depending on the size and nature of the company, this could make the short implementation timeframe complex and expensive.
By acting early and performing an initial impact assessment, you’ll gain an understanding of how the FRS 102 changes will affect your business.
How we can help: FRS 102
Our accounting advisory specialists are here to help your business to start planning today for the changes to FRS 102.
We can prepare an initial impact assessment focussing on the most significant changes to accounting for lease and revenue contracts, and provide practical support on additional systems, data and internal controls required to ensure a smooth transitionary period in preparation for January 2026.
ECCTA
In preparing for the FRS 102 changes, it’s also worth planning ahead for the ECCTA changes which will take effect for UK companies around the same time.
The ECCTA’s gradual programme of reforms started in March 2024. It’s empowering Companies House to ensure accurate and trusted data and prevent unlawful activity.
In late 2024, the UK Government outlined the phases of the ECCTA rollout that UK businesses can expect in 2025-2026. These will include:
- Mandatory identity verification for new directors and PSCs at incorporation
- Mandatory identity verification for document filers and Authorised Corporate Service Providers (ACSPs)
- Software-only filing for accounts and elimination of abridged accounts
- Enhanced financial disclosures, including profit and loss statements
We have more details, including the proposed timetable, here.
How we can help: ECCTA
Our company secretarial (cosec) and corporate governance specialists can help you to understand the changes to your filing requirements under the ECCTA, ensuring that your team are fully prepared for updates to your processes.
Our cosec services include Companies House filings, maintaining statutory registers, managing shareholder registers and acting as registered office.
Changes to company size thresholds and Directors’ Reports
The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 were passed in December 2024. Taking effect from 6 April 2025, they will raise the monetary thresholds that determine company size: annual turnover and balance sheet total. This will reduce reporting requirements for small and medium businesses when filing accounts.
Across the four company size regimes – micro, small, medium and large – the Government estimates that more than 130,000 companies will change their classification to the next regime down.
The new regulations also remove various obsolete, low-value or overlapping requirements for Directors’ Reports.
We have more details here.
How we can help: Company size thresholds
Beyond supporting your business’s reporting and compliance requirements, our specialist advisers are here to help you plan for future opportunities and growth. We’d be happy to discuss the new company size thresholds and their potential effect on your business ambitions.
Corporate governance advice from BKL
The FRS 102 and ECCTA changes highlight the challenges of corporate governance: meeting your business’s statutory and legal compliance responsibilities amid increasing regulation.
Our corporate governance services are tailored to support the sustainable growth of your business. We’ll make sure that you’re demonstrating accountability, reducing risk, increasing business confidence and making a positive social and environmental impact.
Next steps
If you’re a BKL client whose business is likely to be affected by the company reporting and filing changes, look out for more information from us about how we’ll be modifying our services to ensure that you meet the new requirements.
If you’re not yet a client or would like to know more, contact us today for a chat about we help your business to get ready to address the changes ahead.