Anyone running a micro or small limited company needs to be ready for company accounts changes from April 2027.
While the changes aren’t immediate, not being prepared could create issues for you and your company. The new rules come from Companies House. Thousands of small businesses across the UK will be affected under the new rules.
The shake-up will see new regulations aimed at improving transparency in financial reporting. These changes will affect small and micro-entities. Once the new rules are in place, they will be required to file a balance sheet and profit and loss account. Currently, micro and small businesses can choose to only file abridged or filleted accounts.
Business groups have raised concerns about the additional costs companies will need to pay with these changes. And they are also concerned about added complexity and competitiveness.
The Federation of Small Businesses’ Martin McTague says in a news report that his organisation is concerned. He says the changes will add additional costs at a time when companies are already facing rising taxes and inflation.
What are the company accounts changes?
The company accounts changes are being made under the Economic Crime and Corporate Transparency Act 2023. This wide-ranging law modernises company reporting and aims to crack down on financial crime.
Headlines have focused on how this will help put an end to shell companies and dirty money. But the overhaul will create an impact on how small businesses interact with the public register. The changes are:
Software reporting
Filing accounts with Companies House will be only be possible using approved software. You will no longer be able to file:
- Web forms
- Paper filing
Using software that meets new technical requirements, you will need to file every type of account. That includes dormant companies. One of the requirements is that the software allows you to tag your accounts using ‘iXBRL’. This means they’re readable by both people as well as machines.
Accountants already use software to file accounts. So if you’re working with an accountant using such software it won’t be an issue. You’ll just have more boxes to tick.
But any business that handles its own accounts should be thinking now about which software they will use. Remember, it must be approved software, which is on a Companies House list.
Filing requirements
From April 2027, the landscape changes when filing accounts. For small and micro-entities, there is quite a change. This is what you need to know about how it will affect your business.
Micro-entities
If your company is a micro-entity, you will need to file a balance sheet and profit and loss account. Directors’ reports will remain optional.
Small companies
You must meet two out of three criteria to be classed as a small company. Those are companies with:
- A turnover is less than £10.2 million.
- A balance sheet total is £5.1 million or less.
- Fewer than 50 employees.
If you are a small company, you will no longer be able to file abridged or filleted accounts from April 2027. You must file:
- Your balance sheet
- A profit and loss account
- A directors’ report
- An auditor’s report (unless exempt)
More of your company’s financial details will be on public record in future. Some business owners say they are not comfortable about sharing all their details. They are worried about exposing sensitive commercial information.
Audit exemption requirements
Some small businesses will continue to be exempt from audits. But since April 2025, the rules have been tightened up. To claim an exemption now, you must:
- State the exemption being claimed directly on the balance sheet.
- Confirm the company qualifies for the exemption.
Accounting year changes
Another change for companies is that they will only be able to shorten their accounting reference period once every five years. You will need a solid business reason for changing it outside that period. That reason must be shared with Companies House. The government says this is to prevent companies from manipulating their filing periods or delaying publishing ‘unfavourable news’.
Plan ahead
Don’t leave everything to the last minute. If you are a company director, you are responsible for every aspect of the business, including its accounts. So, you must be ready to implement the new rules.
If you need help, our dedicated team is always ready to assist. Just contact us today for a chat about your needs.
