Big headache for small businesses in the UK

More than a million small companies and micro-entities in the UK will have to file profit and loss accounts with Companies House for the first time from April 2028, under reforms the government confirmed this week.

Companies House announced the changes on Tuesday (9 June 2026), implementing accounts reform measures set out in the Economic Crime and Corporate Transparency Act 2023.

The package also requires all UK registered companies to file their annual accounts using commercial software in iXBRL (Inline eXtensible Business Reporting Language) format, with Companies House closing its web and paper-based filing systems for accounts from the same date.

same date.

Small businesses will also lose the option to file abridged accounts, which currently let them submit shortened versions of their financial statements.

Other measures include a strengthened eligibility statement for companies claiming an audit exemption, a requirement to file all component parts of accounts and reports together, and a limit on the number of times a company can shorten its accounting reference period.

Companies House said the reforms aim to improve the transparency, accuracy and reliability of data on the companies register, modernise practices in line with other countries, and tackle economic crime.

The agency originally planned to introduce the changes from April 2027, but pushed the start date back a year to give companies a full accounting year plus nine months to prepare.

It said it will contact all companies via their registered email addresses with guidance, and has published a list of approved software providers on GOV.UK.

Small companies and micro-entities will be able to opt out of publishing their profit and loss accounts on the public register, which Companies House said addresses concerns from the business and investment community about privacy and commercial risks.

Companies House, law enforcement and HMRC will still have access to the information to identify fraud, economic crime and tax evasion.

Backlash from business groups

The reforms mark a U-turn from the government’s position last summer, when the business department under then-business secretary Jonathan Reynolds said the changes would not go ahead because it was committed to avoiding undue burdens on businesses.

Peter Kyle has since replaced Reynolds as business secretary.

The Federation of Small Businesses (FSB) has criticised the move, the Financial Times reported.

Craig Beaumont, Executive Director at the FSB, said forcing profit and loss reporting on more than a million companies would make it more expensive and complex to start a new venture, and accused Companies House officials of making it costlier to start and run a small company in the UK.

Beaumont said the FSB had secured a commitment from the previous business secretary that the reforms would not proceed, and appealed to ministers focused on growth to stop changes he argued would suppress it.

He also noted the timing, with the government and the FSB jointly launching a regulatory small-business task force on Wednesday designed to tackle overbearing regulation.

Sally Baker, corporate reporting director at the Institute of Chartered Accountants in England and Wales, warned that the iXBRL requirement would result in additional costs for some companies, such as hiring accountants to translate financial information into the required computer-readable format, at a time when the cost of doing business is already high.

However, she said the reforms would help modernise the UK’s corporate register and improve the quality of information on it.

Transparency campaigners backed the changes. Steve Goodrich, Head of Research and investigations at Transparency International UK, said criminals had exploited the UK’s previously lax approach to corporate filings on an industrial scale, and that requiring profit and loss accounts from all companies provides an important data source to identify and investigate financial irregularities.

An ally of the business secretary told the FT the government had taken time to get the reforms right, pushing back the start date after months of working with business and ensuring the smallest companies will not have to publish their profit and loss accounts.

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