The content on this page has been converted from PDF to HTML format using an artificial intelligence (AI) tool as part of our ongoing efforts to improve accessibility and usability of our publications. Note:
- No human verification has been conducted of the converted content.
- While we strive for accuracy errors or omissions may exist.
- This content is provided for informational purposes only and should not be relied upon as a definitive or authoritative source.
- For the official and verified version of the publication, refer to the original PDF document.
If you identify any inaccuracies or have concerns about the content, please contact us at [email protected].
Impact Assessment – Amendments to FRS 102 and FRS 105 – UK company size thresholds
The FRC does not accept any liability to any party for any loss, damage or costs howsoever arising, whether directly or indirectly, whether in contract, tort or otherwise from any action or decision taken (or not taken) as a result of any person relying on or otherwise using this document or arising from any omission from it.
© The Financial Reporting Council Limited 2025
The Financial Reporting Council Limited is a company limited by guarantee. Registered in England number 2486368. Registered Office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
Executive Summary
(i)The Financial Reporting Council's (FRC) overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users' information needs.
(ii)In December 2024, The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303) were made in the United Kingdom. These regulations increased certain monetary thresholds that form part of the criteria for determining the size of an entity for financial years beginning on or after 6 April 2025.
(iii)In March 2025, the FRC issued Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime – UK company size thresholds, to update references in those standards to the UK company size thresholds. This Impact Assessment accompanies those amendments.
(iv)The FRC believes that the amendments to UK and Republic of Ireland accounting standards are necessary for consistency with UK company law following changes in legislation.
Introduction and background
1.The purpose of the FRC is to serve the public interest and support UK economic growth by upholding high standards of corporate governance, corporate reporting, audit and actuarial work.
2.The FRC's overriding objective in setting accounting standards is to enable users of accounts to receive high-quality understandable financial reporting proportionate to the size and complexity of the entity and users' information needs.
3.FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland is a general-purpose financial reporting standard available for use by micro-entities and small companies, as well as larger entities, in the UK and Republic of Ireland. FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime is a general-purpose financial reporting standard available for use by micro-entities, in the UK and Republic of Ireland.
4.In December 2024, The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303) were made in the United Kingdom. These regulations increased certain monetary thresholds that form part of the criteria for determining the size of an entity for financial years beginning on or after 6 April 2025.
5.In March 2025, the FRC issued Amendments to FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland and FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime – UK company size thresholds, to update references in those standards to the UK company size thresholds.
Impact Assessment
6.The FRC is committed to a proportionate approach to the use of its powers, making effective use of impact assessments and having regard to the impact of regulation on small enterprises.
Amendments to FRS 102 and FRS 105
7.The amendments update UK and Republic of Ireland accounting standards for changes in UK company law following the UK government's decision to increase the size thresholds used to determine the size of an entity for financial reporting and audit purposes for financial years beginning on or after 6 April 2025. As the amendments reflect changes in UK company law, they are not expected to introduce changes in financial reporting other than when required or permitted by that law. These amendments should have no practical impact on entities in the Republic of Ireland.
8.Assessing the impact of the decision to amend legislation to increase the size thresholds was a matter for the UK government1 and no further impact assessment has been prepared by the FRC in this respect.
9.The FRC believes it is important that the financial reporting standards are updated in a timely manner to reflect these factual changes in legislation.
Conclusion
10.The FRC believes that the amendments to UK and Republic of Ireland accounting standards are necessary for consistency with UK company law following changes in legislation.
Financial Reporting Council
London office: 13th Floor, 1 Harbour Exchange Square, London, E14 9GE
Birmingham office: 5th Floor, 3 Arena Central, Bridge Street, Birmingham, B1 2AX
+44 (0)20 7492 2300
www.frc.org.uk
Follow us on Linked in.
-
The Department for Business and Trade prepared an impact assessment that accompanies the regulations, available at: https://www.legislation.gov.uk/uksi/2024/1303/impacts ↩