Small company reporting requirements: what the government’s 2026 overhaul could mean for you

On 6th September 2026, the government announced an overhaul of the UK’s corporate reporting system. It says the changes could save businesses more than £450 million a year.

A consultation also opened on the next day, 7th September. It covers company accounts, audit exemptions, dividend rules and digital reporting, with several proposals aimed at reducing the administrative burden on small and medium-sized businesses.

Most of the proposals haven’t become law, so your current reporting obligations remain unchanged. However, some separate Companies House reforms are already scheduled for April 2028.

What are the current small company reporting requirements?

For accounting periods beginning on or after 6th April 2025, your company will usually qualify as small if it meets at least two of these conditions:

• Annual turnover of no more than £15 million
• A balance sheet total of no more than £7.5 million
• No more than 50 employees on average

Some regulated companies and businesses belonging to ineligible groups can’t use the small companies regime, even if they fall below the thresholds.

If your company qualifies, you must still prepare annual accounts. These will normally include a profit and loss account, a balance sheet and notes. You may also need group accounts if your company owns other businesses.

Small companies don’t usually need to prepare a strategic report and can often claim an audit exemption. Under the current rules, you can omit your directors’ report and profit and loss account from the copy filed at Companies House.

The small company accounts guidance explains the existing requirements and exemptions.

What could change for small companies?

The government wants to simplify how companies are classified and reduce overlap between company law, accounting standards, and other regulations.

One option is a broader reporting regime for small and medium-sized enterprises. This could allow medium-sized companies to use some of the exemptions currently limited to small companies.

Smaller companies could also benefit from clearer financial reporting requirements. The consultation proposes moving some detailed accounting rules out of company law and into accounting standards. It also considers reducing the range available to UK companies to four principal standards.

Although this wouldn’t necessarily reduce the amount of financial information you need to prepare, it could make it easier to establish which rules apply to your company.

Could more companies become exempt from audit?

The government is considering extending the small-company audit exemption to some or all medium-sized companies.

If your company is currently classed as medium-sized, this could remove the legal requirement for an annual statutory audit. However, you might still need one because of a bank agreement, grant condition, shareholders’ agreement or industry rule.

You could also choose to have an audit voluntarily. Audited accounts may reassure lenders, investors, shareholders or prospective buyers, particularly when they aren’t closely involved in running the business.

If the exemption is extended, you’ll need to consider both the cost of an audit and the value it provides to the people who use your accounts.

Could the dividend rules change?

Your company currently needs sufficient distributable profits before it can pay a dividend. The amount of cash in its bank account doesn’t determine whether the payment is lawful.

The government is considering replacing the current rules on distributable profits and capital maintenance with a solvency-based system. This would place more emphasis on whether your company could meet its financial obligations after it had paid the dividend.

The proposal could directly affect owner-managed companies, where dividends often form part of a director’s remuneration. It may also increase the importance of recording how you assessed the company’s financial position before approving a payment.

Until any new rules take effect, you should continue to use the existing distributable-profit test.

What is already changing in April 2028?

Separate Companies House reforms will take effect from 1st April 2028. These changes have already been confirmed and shouldn’t be confused with the new consultation.

Every UK company will need to file its accounts through commercial software using iXBRL. The current web and paper filing routes for annual accounts will end.

Small companies and micro-entities will also need to submit their profit and loss accounts. You’ll be able to stop this information appearing on the public register, although Companies House, HMRC and law-enforcement bodies will still have access to it.

Other changes include:

• Removing the option to file abridged accounts
• Requiring every part of the accounts and reports to be filed together
• Strengthening the statement used to claim an audit exemption
• Restricting how often you can shorten your accounting reference period

Companies House has published a summary of these changes.

If you currently file your own accounts, check that you’ll have suitable commercial software before the new system begins.

Can you respond to the consultation?

The consultation closes at 11.59pm on 30th November 2026. You can respond if you have views on the cost, usefulness or complexity of the existing reporting requirements.

The government is particularly interested in evidence from businesses. If a particular disclosure takes time and money to prepare but provides little value to your shareholders, investors or lenders, you can explain this in your consultation response.

Need help with your company accounts?

THP’s annual accounts service can help you establish which reporting requirements apply, claim the correct exemptions and prepare your accounts for Companies House and HMRC.

If you’re unsure how the current rules or the April 2028 changes affect your company, get in touch. We’d be delighted to help.