TTR Barnes

From 2026, many small companies preparing accounts under FRS 102 Section 1A will face significantly increased financial statement disclosure requirements.

For many owner-managed businesses, this means more information than ever before will appear in the accounts filed at Companies House.

However, if your company qualifies as a micro-entity, you may be able to move to the FRS 105 reporting framework and reduce the amount of information that needs to be included in your filed accounts, all while remaining fully compliant with UK accounting standards.

Here are TTR Barnes, we’re already helping clients understand what these changes mean, whether they need to act, and whether changing accounting frameworks could be beneficial.

What’s changing?

The Financial Reporting Council (FRC) has updated FRS 102 as part of its latest review of UK accounting standards. For accounting periods beginning on or after 1 January 2026, small companies applying FRS 102 Section 1A will need to include a wider range of disclosures within their statutory accounts.

While the accounting records you keep may not change significantly, the amount of information included in your published accounts is increasing.

New or expanded disclosures are expected to include areas such as:

• Related party transactions
• Dividends paid during the year
• Going concern statements
• Tax reconciliations
• Provisions and contingent liabilities
• Share-based payment arrangements (where applicable)
• Additional disclosures relating to revenue recognition and leases where relevant

For many businesses, this means accounts will become longer and contain more information than in previous years.

Why does this matter?

Many owner-managed businesses prefer to keep commercially sensitive information as private as possible.

Although statutory accounts are prepared primarily to meet legal reporting requirements, they are also filed at Companies House and can be viewed by customers, suppliers, competitors, lenders and other third parties.

The new disclosure requirements mean more detail about your business may become publicly available than has historically been the case.

Examples include additional information around related party transactions and dividends, where applicable.

Could FRS 105 be an alternative?

For companies that qualify as micro-entities, the answer may be yes.

FRS 105 is the UK accounting standard specifically designed for the smallest companies. It offers a much simpler reporting framework with fewer disclosure requirements than FRS 102.

In many cases, this means:

• Shorter statutory accounts
• Fewer notes to the accounts
• Less information placed on the public record
• A simpler year-end reporting process

Importantly, this is not about hiding information or avoiding compliance. It is about using the accounting framework that Parliament and the Financial Reporting Council have specifically created for qualifying micro-entities.

Is switching the right decision?

Well, that depends on the individual set-up and circumstances of the business.

While FRS 105 can reduce disclosure requirements, it isn’t suitable for every organisation.

Before making any change, it’s important to consider factors such as:

• Whether your company qualifies as a micro-entity
• Whether lenders or investors expect FRS 102 accounts
• The type of business you operate
• Future growth plans
• Group company reporting requirements
• Whether the accounting differences between FRS 102 and FRS 105 could affect reported results

Changing accounting frameworks is more than simply choosing a shorter set of accounts. There can be accounting adjustments on transition, and the decision should always be considered carefully.

Qualifying Criteria

To qualify for the micro-entity regime and use FRS 105, a UK company must meet at least two of the following three criteria for two consecutive years.

Current Thresholds (For financial years beginning on or after 6 April 2025)

• Annual Turnover: £1 million or less
• Balance Sheet Total (Net Assets / Gross Assets): £500,000 or less
• Average Number of Employees: 10 or fewer

Previous Thresholds (For financial years beginning before 6 April 2025)

• Annual Turnover: £632,000 or less
• Balance Sheet Total: £316,000 or less
• Average Number of Employees: 10 or fewer

Key Exclusions

Certain entities cannot use FRS 105 even if they meet the size limits:

• Charities
• Financial institutions, banks, or insurance companies
• Undertakings involved in fund management or investment business

 Compliance comes first

Although reducing public disclosures can be an attractive benefit, compliance must always be the priority.

Directors remain responsible for ensuring that their accounts:

• comply with the Companies Act 2006
• comply with the relevant accounting standard
• give a true and fair view where required
• are prepared using the most appropriate reporting framework for the business

A move to FRS 105 should never be made solely to reduce public disclosure. It must be appropriate for the company’s circumstances and meet all legal eligibility requirements. Professional advice is essential before making any change.

How we can help

Every business is different, which is why there is no one-size-fits-all answer.

Our team can help you:

• Confirm whether your company qualifies for FRS 105.
• Explain exactly what the new FRS 102 disclosure requirements mean for your business.
• Compare the advantages and disadvantages of each framework.
• Manage any transition between accounting standards.
• Ensure your accounts remain fully compliant while keeping reporting as straightforward as possible.

For many businesses, doing nothing may still be the right choice.

For others, now could be the ideal time to review whether FRS 105 offers a simpler and more appropriate reporting framework.

Talk to us before your next year-end

The new FRS 102 disclosure requirements will affect many small companies from accounting periods beginning on or after 1 January 2026, so it’s worth reviewing your position before your next accounts are prepared.

If you’re unsure which accounting framework is right for your business, we’d be happy to talk through your options. A simple review now could help avoid surprises later and ensure you’re using the reporting framework that’s right for your company, both now and as your business grows.

All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article. For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.