Digital annual reports to become the default for UK companies under new government proposals
Key Points
- Electronic shareholder communications become the default under Department for Business and Trade proposals
- Consultation opens Monday (7 September) and closes on 30 November 2026
- Government exploring AI to cut reporting and compliance time for companies
- Some medium-sized companies to qualify for audit exemption under the plans
- Reforms expected to save UK businesses more than £450 million a year
The Department for Business and Trade will make electronic communication with shareholders the default for UK companies under corporate reporting proposals that it said will save businesses more than £450 million a year.
The department set out the plans in a press release ahead of a consultation that opens on Monday (7 September) and closes for responses on 30 November 2026.
Companies will send annual reports and other shareholder communications digitally by default, replacing the printed documents that many firms still post out under current rules.
The department said it is also exploring how AI can further cut the time companies spend on reporting and compliance.
The department said the average annual report and accounts of some businesses now runs to 98,000 words, which is longer than J. R. R. Tolkien’s The Hobbit. For FTSE 100 companies, the average report runs to 152,000 words.
“No-one goes into business to fill out forms. For years, hardworking firms in this country have been weighed down by pen-pushing paperwork and frustrating costs, ticking boxes that do nothing to help them grow their business,” said Business Secretary Jonathan Reynolds.
“We’re stripping back outdated bureaucracy and building a common-sense system fit for a 21st-century economy. This will cut the cost of doing business, giving breathing room to bosses across the country, and free them up to focus on what they do best, creating jobs and growth,” Reynolds added.
The digital-first move sits alongside a wider package of changes to what UK companies have to report each year. The consultation will propose lighter rules for small and medium-sized enterprises, including allowing some medium-sized companies to qualify for audit exemption.
The department will also test whether private companies should continue to face non-financial reporting requirements, and will look to streamline financial reporting, the strategic report and remuneration reporting.
It plans to replace the rules on distributable profits and capital maintenance with a solvency-based regime, and to make the UK’s financial reporting law clearer and more coherent.
Separate legislation to scrap the directors’ report and extend exemptions from the strategic report is already underway, and the department expects those changes to save businesses around £230 million a year.
The department said the reforms form part of the government’s Industrial Strategy commitment to cut red tape by 25%, alongside planning reforms, energy cost support for over 10,000 businesses and R&D funding.
“Corporate reporting is a central piece of investor and market confidence, but it’s also a resource-heavy process for many businesses,” said Jordan Cummins, UK Competitiveness Director at the CBI.
“Moves to modernise our reporting regime are welcome, and firms across the UK will look forward to helping government and regulators land on a future-proofed and agile framework,” Cummins added.
“We welcome this consultation and the Government’s continued focus on a simpler, more proportionate framework for companies,” said James Ashton, Chief Executive of the Quoted Companies Alliance.
“Annual reports play an important role in shareholder communication, but reforms should help companies focus on growth and productivity while maintaining trust and confidence,” Ashton added.
