UK GAAP changes – amendments to Financial Reporting Standard (FRS) 102
The changes to UK GAAP are effective for accounting periods beginning on or after 1 January 2026.
The significant changes include:
Changes to lease accounting
The amendment will mean that leases are recorded on the balance sheet.
The lease will be recorded as a right of use asset and a lease liability will also be recognised as a creditor on the balance sheet.
Depreciation on the right of use asset and interest payable on the lease liability will be recorded in the profit and loss account.
There are two exemptions available, and this relates to short term leases (less than 12 months) and leases of low value assets.
Introduction of a five-step model for revenue recognition
The five-step model focuses on identifying the goods or services provided to a customer and determining the amount of consideration for those goods or services and timing of revenue recognition. The fives steps are as follows:
1 – Identify the contract with the customer.
2 – Identify the performance obligation in the contract.
3 – Determine the transaction price.
4 – Allocate the transaction price to the performance obligations in the contract.
5 – Recognise revenue when (or as) the entity satisfies a performance obligation.
Furthermore, additional mandatory disclosures must be made by small entities which includes:
- Disclosure of all related party transactions
- Disclosure of dividends declared and paid, or payable.
- Disclosures including information on leases, going concern, current and deferred tax.
If your company is affected by the financial reporting changes or you want to know more about UK GAAP changes, we can help. Contact your local Perrys branch today.
We also have a blog on what these changes mean for charities and this can be found here.
What is UK GAAP?
UK GAAP (Generally Accepted Accounting Practice) are the rules and practices that govern how companies in the UK should prepare and report their financial statements to remain compliant for regulators, e.g. Companies House and HMRC.
What is FRS 102?
FRS 102 (Financial Reporting Standard) is the main accounting standard used in the UK and ROI. It sets rules for financial reporting like recording money, assets and statements.
More information can be found on this here.
Author bio
Scott Jiggins
Scott joined Perrys in 2013 and works as part of the audit and accounts team, based at the London office. Scott is AAT and ACCA…
