Upcoming changes to UK accounting standard (FRS 102)
JANUARY 2026
As we enter the new year, clients should be aware of some upcoming changes to FRS 102 (the UK accounting standard) which may affect certain businesses over the next couple of years.
All entities reporting under FRS 102 will be affected, including small, medium, and large companies as well as groups. Businesses with significant lease commitments or complex revenue arrangements are expected to see the greatest impact.
The main changes are:
- Revenue recognition – a new model applies to contracts with customers, which may affect the timing and amount of revenue recognised for some businesses (particularly those with more complex or bundled contracts).
- Lease accounting – from 2026, many leases will need to be shown on the balance sheet, rather than treated as simple rental costs.
- Additional disclosures – including new disclosures for supplier finance arrangements (applying earlier, from 2025), and some expanded narrative disclosures.
Most of the changes apply to accounting periods beginning on or after 1 January 2026, although not all businesses will be significantly affected.
We will review the impact as part of our normal accounts preparation process and will contact you if we believe the changes are likely to be relevant to your business. If you would like to discuss this sooner, please feel free to get in touch.