After months of delays, the Government has finally confirmed how the Economic Crime and Corporate Transparency Act 2023 (EECTA) will change the way small businesses report their finances to Companies House.
The new rules take effect from 1 April 2028 and will affect small companies and micro-entities across the UK.
Profit and Loss (P&L) accounts required
Under the new rules, small companies and micro-entities will be required to file both a balance sheet and a Profit and Loss (P&L) account with Companies House for the first time.
However, following significant lobbying from business groups, the Government has dropped its original plan to make this information fully visible on the public register.
Businesses will instead be able to opt out of publication, keeping their financial details off the public-facing register.
Companies House has acknowledged the privacy and commercial risks that full disclosure would have created for smaller businesses.
Details of the opt-out process have not yet been confirmed, but further guidance is expected in due course.
Importantly, the opt-out only applies to public visibility. HMRC, Companies House and law enforcement agencies will still be able to access the information for fraud and financial misconduct investigations.
Abridged accounts will be scrapped
The option to file abridged accounts will be abolished entirely. This type of filing required formal shareholder approval and allowed key figures to be combined into broad categories.
It has long been a source of frustration for smaller businesses, so its removal is unlikely to be widely mourned.
New software requirements for filing
From April 2028, all UK-registered companies will need to file their annual accounts using commercial software that supports the Inline eXtensible Business Reporting Language (iXBRL) format.
This applies whether a business files its own accounts or uses an accountant or agent to do so.
The current web and paper-based filing systems will close for accounts submissions at the same time, though other Companies House services, such as confirmation statements and director updates, will remain available online.
Other changes coming in 2028
The reforms also introduce a requirement for all parts of a company’s accounts and reports to be filed together in one submission.
Alongside this, there will also be a strengthened eligibility statement for companies claiming an audit exemption.
Companies House has confirmed it will introduce a limit on how many times a business can shorten its accounting reference period, though this will require secondary legislation before it comes into force.
Time is shorter than it looks
Businesses now have 21 months to prepare. That is roughly equivalent to one full accounting period plus nine months.
For businesses that currently use paper or web-based filing, the switch to iXBRL-compatible software alone will take time to plan and implement.
If you need help preparing for the changes coming in April 2028, please get in touch with our team.
