If you run a small or micro business in the UK, big changes are coming to the way you file your accounts with Companies House. We have already seen changes in the identification verifications at Companies House, but there is more. Companies House is now changing the filing rules for small businesses.
From 1 April 2027, Companies House is making the most significant changes in years to how small companies report their financial information. These changes will affect most of you if you operate via a limited company.
These updates aim to enhance transparency, reduce fraud, and ensure all businesses are playing by the same rules. Here’s what you need to know.
No More Abridged Accounts
Currently, many of you, as small businesses, choose to file abridged accounts, a simplified version of your financial statements. This allows you to avoid publishing a profit and loss account or a directors’ report. It provides you with some privacy regarding the details of your financial performance.
But from 1 April 2027, abridged accounts will be scrapped. That means:
- You’ll need to file more detailed financial information.
- There’s no more “cut-down” option.
This applies to both small and micro-entity businesses.
This is a significant change, and one that we will all need to adjust to. When you incorporate your business, you accept that your information will be available in the public domain; however, it was previously a much more restricted version. As Companies House overhauls the filing rules for small businesses, a lot more data will be available to the public.
What You’ll Need to File
Here’s what the new rules mean for your business, depending on its size:
- If you’re a micro-entity, you’ll need to file:
- A full balance sheet
- A profit and loss statement
- If you are a small company, you’ll need to file:
- A balance sheet
- A profit and loss statement
- A director’s report
- An auditor’s report unless you are exempt
This means your company’s financial performance will be more visible to the public, including competitors, lenders, and potential customers.
Definitions of micro and small Companies:
Use the guide below to check whether your company falls under the new “small” or “micro-entity” rules.
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A company is considered small if it meets any two of these:
- Annual turnover of £15 million or less
- Balance sheet total of £7.5 million or less
- 50 employees or fewer
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A micro-entity meets any two of these:
- Annual turnover of £1 million or less
- Balance sheet total of £500,000 or less
- 10 employees or fewer
Audit Exemptions: More Responsibility for Directors
Many small businesses are exempt from audits; however, from 2027, claiming this exemption will require additional steps.
If your company wants to claim an audit exemption, your directors must now include a clear statement on the balance sheet explaining why you qualify.
This is being introduced to help prevent the misuse of audit exemptions and to increase the accountability of directors.
We are, of course, well placed to help you draft this statement when we prepare your year-end accounts. However, if you have any concerns about this, please get in touch with your usual manager.
Dormant Companies are under the spotlight
If you have a dormant company (a company with no significant financial activity), be aware that Companies House is also tightening the rules here.
From April 2027:
- Directors will need to state which exemption they’re using.
- They’ll have to confirm that the company qualifies as dormant.
Some companies are falsely claiming to be dormant while still moving money through their bank accounts. These new requirements are intended to prevent such abuse.
If you have money coming in or out of your business bank account, then it will be hard to argue that the company is dormant.
Restrictions on shortening your accounting year end.
Right now, businesses can shorten their accounting reference period multiple times, which can be used to delay filings. You can only extend your year-end once every five years.
From 2027, you’ll only be allowed to shorten your accounting period once every five years as well, unless you have a good business reason. If you do, you’ll need to explain why.
Why Are These Changes Happening?
The new rules are part of the Economic Crime and Corporate Transparency Act 2023, which aims to:
- Improve the accuracy of the companies register
- Make it harder to misuse company structures
- Give businesses, lenders, and the public better financial data
Companies House says these changes will strike a balance between greater transparency and keeping admin simple for honest business owners.
What Should Small Business Owners Do Now?
While these changes don’t take effect until April 2027, it’s wise to start preparing now. Here’s what you can do:
- Review your current filing practices. Are you using abridged accounts? That option is going away.
- Talk to your accountant or advisor about how these changes will affect your reporting. Please call your normal manager at Myers Clark who will be happy to discuss this with you.
- Make sure your directors are aware of the new requirements, especially around audit exemptions and dormant company rules.
- Stay organised with your financial reporting and filing dates, especially around accounting period changes. Leaving things until the last minute will be more painful and may even result in penalties.
Final Thoughts
This update may feel like extra red tape, but it’s designed to protect legitimate businesses and improve trust in the UK business system. Being informed and prepared will help you stay compliant and keep your business running smoothly.
If you are working with us, all you need to do is provide us with full information with plenty of time. This will help you remain compliant and also provide us with the opportunity to offer you valuable feedback on your financial position. We’re serious about your and your ambitions.
If you are not yet working with us, please email enquiries@myersclark.co.uk or explore how we work.