If you run a small, limited company, you probably don’t spend much time thinking about your annual accounts. Your accountant prepares them, you review the numbers, sign off, and file them.
But some important changes are coming, and while some won’t take effect for a while, others already apply to accounting periods beginning 1 January 2026.
So what is changing, and what does it mean for the average small business owner?
More Information Will Need to Be Filed at Companies House
For many years, small companies have benefited from reduced filing requirements. Depending on the accounts prepared, businesses have been able to keep much of their detailed financial performance out of the public Companies House record. That is changing soon.
The Economic Crime and Corporate Transparency Act 2023 introduced significant reforms to company reporting, and the Government has now confirmed that a major package of filing changes will take effect from April 2028. Small companies and micro-entities will have to file their profit and loss account with Companies House, and the option to file abridged accounts will disappear.
That’s significant because your profit and loss account provides much more detail about how your business is performing. This means much more detail about your company’s profitability will be visible to the public.
There is some good news around privacy. Small companies and micro-entities can choose not to have their filed profit and loss account published on the public register, although the details of how that opt-out will work have not yet been confirmed.
One correction to the original proposals is worth noting too: small companies will not be required to file a directors’ report. The Government has since removed that requirement as part of its wider corporate reporting reforms. This will come as a relief to most of you.
From April 2028, companies will also have to file accounts through commercial software rather than the existing Companies House web or paper filing routes. If you’re using an accountant like us to do the filing, it is one less thing for you to worry about.
Leases Are About to Look Very Different Too
This may be the biggest change for businesses that rent premises, vehicles, or equipment.
Under the revised FRS 102 accounting standard, many leases will appear differently in company accounts.
Historically, many operating leases have been fairly straightforward. For example, you rent premises, pay the rent, and the expense goes through your profit and loss account.
Under the revised rules, many of these leases will instead have to appear on the balance sheet. Broadly, this means recognising a right-of-use asset alongside a lease liability.
For the business owner, the important point isn’t the accounting terminology. Your accounts could suddenly look quite different, even though the underlying business hasn’t fundamentally changed.
That matters because lenders and other interested parties often use your accounts to assess financial performance.
So, if your business has significant leases, it’s worth talking to your accountant now about the potential impact rather than waiting until the accounts arrive. If you are working with us why not call your normal manager to have a brief discussion around this and any other topic.
Small Company Accounts Will Include More Information
Small companies operating under FRS 102 will also need to consider changes to the disclosures. One area is related-party transactions.
These could involve transactions with directors, shareholders, close family members or connected businesses. The point here is that there will be greater transparency around material transactions involving people and businesses closely connected to the company.
Dividend reporting is another area receiving more attention.
For many owner-managed businesses, dividends are a normal way owners take money from their company. The revised requirements increase the information that needs to be provided about relevant dividends declared and paid.
There are also additional requirements around taxation, provisions and going concern. It all sounds technical, but ultimately, it’s part of a wider theme: small company accounts are becoming more informative and transparent.
Could Micro-Entity Accounts Be Worth Considering?
With FRS 102 requiring more information, this may also be a good opportunity to ask whether your business is using the most appropriate accounting framework.
Some smaller businesses may qualify for FRS 105 micro-entity accounts, which have fewer disclosure requirements than the small company regime under FRS 102.
The important point is not to assume that the accounting framework you’ve always used must remain the right one forever. Of course, your accountant can discuss the best options for you.
What About Audit Requirements?
Company-size thresholds have also shifted, which can affect whether a company falls within the small- or medium-sized company regime and whether it may be eligible for an audit exemption.
For many genuinely small owner-managed businesses, this won’t make an immediate difference. But fast-growing businesses should keep an eye on where they sit.
This becomes particularly interesting alongside the changes to lease accounting. Bringing certain leases onto the balance sheet can increase reported assets, so businesses approaching company-size thresholds should understand how the changes interact rather than looking at each in isolation.
What Should Business Owners Actually Do?
You don’t need to panic or become an accounting expert. But there are a few useful questions worth asking:
- Do we have significant property, vehicle or equipment leases?
- How could the new lease accounting rules change our accounts?
- Do our bank facilities contain financial covenants based on figures in those accounts?
- Are we still using the most appropriate accounting framework?
- Could we qualify as a micro-entity?
- When ownership or related-party arrangements change, are we telling our accountant?
- Are we likely to be affected by the Companies House filing changes from April 2028?
On a side note there are additional disclosures also required in your 2026 personal tax return if you are a director of a small company. You can find out more here.
Final Thoughts
At first glance, these changes might feel like another layer of accounting rules for small businesses to worry about. But that’s not really the aim.
The direction of travel is towards greater transparency and more useful financial information. Companies House says its April 2028 reforms aim to improve the accuracy and reliability of company-register data, help inform business decisions, and tackle economic crime. For business owners, the key is understanding how the changes affect your company.
You don’t need to learn FRS 102. That’s our job. But you should understand when a change in accounting rules could affect how your company looks to lenders, shareholders and other people using your accounts.
If you’re working with us and have questions about the revised accounting rules, leases, FRS 102 versus FRS 105 or the forthcoming Companies House changes, speak to your normal manager.
If you are not yet working with us but would like to work with us, here’s who we are.