While business owners are likely already aware of the impact these changes will have, in particular on the treatment of leases and the changes to income recognition, which could have a significant impact on reported assets and liabilities and impact on what period turnover is reflected in P&L, the realisation that these changes come into effect in less than one month’s time may come as a surprise, as it did to me when I realised I was almost on the last page of my calendar.

While I doubt many people will be spending New Year’s Day converting their accounts figures to the new standard, certainly not a task to be undertaken while recovering from festivities the night before, some comfort can be taken that the real impact of the changes will not be felt until early in 2027, with 31 December 2026 year ends being the first to be effected, excluding shortened periods.

Delaying preparing for these changes poses an additional challenge to business owners as many may well not realise that there are further significant changes, specifically impacting on many small businesses, planned to come into effect from April 2027. Which could lead to a storm of having to deal with both changes to accounting standards and filing requirements at the same time, planning ahead is crucial to avoid a last-minute scramble.

These changes stem from the announced reforms in the Economic Crime and Corporate Transparency Act 2023 (ECCTA) and wider government modernisation efforts. The major changes are:

1. Software‑only accounts filing

All companies, including micro, small, dormant, LLPs, charitable companies and overseas entities operating in the UK, will have to file their annual accounts using approved commercial software in iXBRL format. Paper submissions and the existing web filing route will be withdrawn.

2. More detailed disclosures for small and micro‑entities

Under the reforms, small and micro companies will lose the ability to file abridged accounts. They will be required to submit a full profit & loss account, and small companies must file their directors’ report.

3. Restrictions on changing accounting periods

Companies will only be allowed to shorten their accounting reference period once every five years (unless there is a valid business reason), aligning with existing rules on extending a period. Effectively closing a common loophole used by some companies that regularly shorten their year end by one day just before filing deadlines to benefit from an automatic 3-month filing extension.

4. Greater enforcement powers for Companies House

Companies House will have stronger powers to query, reject or remove filings that appear misleading or inconsistent.

While these changes are intended to improve transparency, reduce fraud risk, and modernise Companies House, they will also impose operational challenges and costs. Smaller companies and owner‑managed businesses may feel a heavier compliance load particularly those without in-house accounting resources.

Companies still filing accounts via paper or the web portal will have to either adopt compliant software or engage third‑party agents. In these cases, new software licences and training of the team in using the new program will become an added compliance expense.

For companies that fail to transition appropriately, they may see filings being rejected resulting in incurring late‑filing penalties or other Companies House enforcement actions. Company directors will be responsible for ensuring that iXBRL tagging is accurate and digital filings are correctly made.

From a commercial perspective under the current regime, smaller businesses often file limited or abridged accounts. The new rules will make their profit & loss and director reports publicly available, potentially exposing commercially sensitive information.

What businesses can do now?

• If still filing accounts on paper or through the Companies House web filing service, investigate purchasing or upgrading to software that can produce accounts in the required iXBRL formats, supports digital filing and ensure that finance teams are trained to prepare tagged accounts and manage submissions under the new rules.
• Engage with a professional accountant who can support you in complying with the new filing requirements, as well as advise on the impact of the other changes, or ensure that your current adviser is aware of the upcoming changes and has the software to be able to provide the digital filing service from April 2027.
• With more of the financial statements becoming public, consider how this could affect your business, especially with the disclosure of annual turnover, gross and net profit margins and comparative information consideration is needed to competitive positioning as well as ensuring that the directors report meets the legal requirements.
• Continue to monitor further guidance as some details are still being finalised. There is therefore the possibility regulators may alter adoption dates for some elements, release transitional periods or phased approaches.

Now is the best time to speak to an accountant to ensure that you are prepared for the accounting standard changes and that you are aware of the April 2027 changes, how these will impact your specific circumstances and what action can be taken to manage these.

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