UK Accounting Rules – Overview

In the UK, accounting rules are governed by a combination of law mainly the Companies Act 2006 and accounting standards (FRS and GAAP), depending on the size and type of the business.

UK Accounting Rules – Overview

1. Legal Framework

  • Governed by the Companies Act 2006

  • Sets out:

    • Filing deadlines

    • Format of financial statements

    • Requirements for audits and disclosures

2. Accounting Standards

UK companies must prepare accounts using one of two main frameworks:

🔹 FRS 102 (Financial Reporting Standard 102)

  • The main UK accounting standard for medium and large entities.

  • Part of the UK GAAP (Generally Accepted Accounting Practice).

  • Covers how to recognise income, expenses, assets, and liabilities.

🔹 FRS 105 – Micro-entities

  • For very small businesses that meet at least two of these:

    • Turnover ≤ £632,000

    • Balance sheet total ≤ £316,000

    • ≤ 10 employees

  • Simplified disclosures and reporting.

NOTE: These limits are correct as at June 2025. Check Gov.uk or the latest limits.

🔹 FRS 101 – Reduced Disclosure Framework

  • For subsidiaries of groups that prepare consolidated IFRS accounts.

  • Allows UK companies to apply IFRS with fewer disclosure requirements.

🔹 IFRS (International Financial Reporting Standards)

  • Required for UK listed companies on the stock exchange.

  • Optional for other companies if they choose to follow international standards.

3. Audit Requirements

A company needs an audit unless it qualifies as small:

  • Small company exemption applies if two of the following are met:

    • Turnover ≤ £10.2 million

    • Balance sheet total ≤ £5.1 million

    • ≤ 50 employees

NOTE: These limits are correct as at June 2025. Check Gov.uk or the latest limits.

4. Filing Requirements (Companies House)

Type of Company Filing Deadline What to File
Private limited 9 months after year-end Full or abridged accounts
Public limited (PLC) 6 months after year-end Full audited accounts
Dormant companies 9 months after year-end Dormant company accounts

5. Tax Reporting (HMRC)

  • Must also file accounts with HMRC as part of your Company Tax Return.

  • Usually must be in iXBRL format.

  • Accounting profits are adjusted to calculate taxable profits.

📝 Summary Table

Business Type Standard Used Audit Needed? Filing Required?
Micro-entity FRS 105 No Abridged accounts
Small company FRS 102 (1A) No (if eligible) Abridged/full accounts
Medium/Large FRS 102 Usually yes Full accounts
Listed company IFRS Yes Full IFRS accounts
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