New reporting requirements for small company directors from April 2028

News from Companies House today, and more requirements upon limited company directors just around the corner, particularly focused on those of us who have small companies.

After being set out in the Economic Crime and Corporate Transparency Act 2023, government is changing how and what small businesses need to report to Companies House each year.

These changes are primarily designed to reduce fraud and dodgy companies being set up.

These changes will affect small companies and micro-entities (I have defined these below in the notes) - but that is probably everyone here.

What's changing?

The new rules will:

• require small companies and micro entities to file profit and loss accounts with Companies House, but with the option to opt out of publishing this information on the public register
• require all companies to file their annual accounts via commercial software
• remove the option for companies to file abridged accounts
• strengthen the eligibility statement for all companies claiming an audit exemption
• require component parts of the filed accounts and reports to all be filed together
• reduce the number of times a company can shorten its accounting reference period

Read the full announcement on GOV.UK.

What's the impact?

The biggest impact is most likely to be the profit and loss accounts, which is submission of some additional information to what you might be used to, and going through the process to opt out of publishing your accounts - which most small businesses are likely to want to do.

Finding commercial software to submit accounts is also an additional requirement, as businesses have been previously able to do this direct via Companies House, but this will no longer be possible - which means additional software, and possibly associated costs.

The exact details on process for things like opting out have not been announced yet.

Tom Crompton, founder of The 3Key, explains this might be less of a burden than it might initially seem though:

"A company must already prepare a Profit and Loss for HMRC when they submit their accounts to HMRC, it’s just that this element of the report is redacted when you submit to Companies House. Going forward, you wouldn’t redact this element, but you would opt out of being visible on the public record. That’ll be a tick box exercise rather than anything materially time-consuming. I’d argue it simplifies the reporting requirements as you’re only needing to report one set of accounts, as opposed to two."

When is this happening?

These changes were planned to come into force in April 2027, but the timelines have been extended to April 2028, to give companies more time to prepare. So whilst you have over a year to get ready - it is worth understanding what this might mean for your business now.

We will remind you here, on freelancing.support, close to the time, and help with resources around understanding what the new changes might mean for you as a business.

Questions to ask

• If you use software for your accounting, will it support these changes and allow you to submit your Companies House annual accounts and profit and loss reports?
• If you work with an accountant, are they aware of this change, and helping you prepare for any changes ahead of the deadline?
• If you do not use an accountant, are you aware of how to prepare a profit and loss report, and do you know where to find software to submit your annual accounts?
• When will you plan to get prepared, and ensure your process is ready for the changes? Is it something you can schedule in the calendar now?

Notes

Small companies meet two or more of these criteria: less than £15m turnover, less than £7.5m on the balance sheet, 50 employees or fewer.

Micro entities meet two or more of these criteria: less than £1m turnover, less than £500k on the balance sheet, and 10 employees or fewer.