UK GAAP Periodic Review: Major Reporting Changes Ahead for Leases, Revenue, and Disclosures. What it means for your accounts!

2026 may still feel like a while away yet, but in the world of accountancy, preparations are being made for big changes. For accounting periods starting on or after 1 January 2026, the Periodic Review 2024 will come into effect for companies applying UK GAAP.

Whilst we could talk for days about the changes which are coming, we’d like to share the headlines with you now. 

• Supplier Financing – the early adopted change

Whilst the rest of the changes below apply to accounting periods starting on or after 1 January 2026, companies need to keep in mind that for accounting periods starting on or after 1 January 2025, an early change to the disclosure requirements for supplier finance arrangements is coming into place.

Supplier finance arrangements occur where a finance provider pays for a company’s supplier invoices, often at a more beneficial rate than the supplier’s terms. Where these are present, and the company isn’t exempt, there will be a requirement to disclose the key terms and conditions of the arrangement, balances at the year end, and compare the payment terms of the arrangement to those of the suppliers they relate to.  

• Leases – the balance sheet shift

Under the current UK GAAP, lease commitments are required to be disclosed in the financial statements and recorded as costs through the company’s profit and loss account. For accounting periods starting on or after 1 January 2026, most leases need to be recognised on the balance sheet instead, using both a right of use asset, and a lease liability. 

The unwinding of the lease liability will release interest to the profit and loss account over its life, and the right of use asset will depreciated over the shorter of its useful life and the length of the lease.

When adopting the Periodic Review 2024 changes for the first time, companies will need to calculate the right of use assets and lease liabilities balances for all existing leases as at the start of the accounting period. No changes are required to be made to the comparative figures in the accounts.

Some short-term or low value leases will not be subject to these rules, and the costs will continue to run through as an expense, but for a lot of companies, this change is going to result in a large shift in their balance sheets. 

• Revenue Recognition – the profit and loss conundrum 

Following the Periodic Review 2024, companies will need to consider a 5 step approach when recognising their revenue. This includes identifying contracts with customers, considering what performance obligations are included within these, and how much revenue is applicable to each of these obligations. Ultimately, this should mean that revenue is recognised when the performance obligations are satisfied, either at a point in time, or over time.

When obligations are met over time, such as with a construction contract, progress on the obligation would need to be assessed at the year end. If progress can be reliably assessed, then a portion of the income relevant to the progress would be recognised in the year. If the progress cannot be reliably assessed, then the income recognised is capped at the relevant costs incurred to date.

Under FRS102, companies are also required to recalculate their revenue for the previous period under the same rules to correct their opening position for the first period under the new rules. Companies can opt to use either a full retrospective approach, in which all the balances affected by the rules are restated for the prior year, or they can use a modified retrospective approach, which records the effect of the change in the previous year in the brought forward reserves.

•  Enhanced disclosures – no longer optional

 The Periodic Review 2024 will bring in mandatory disclosure requirements for accounts prepared under FRS102 section 1A that have previously been optional. These include:

• Related party transactions
• Dividends paid or payable per share
• Details of share based payments
• Detailed descriptions and movements of provisions 
• Split of components of tax expense / income and deferred tax liabilities / assets

Whilst this is only a summary of some of the changes which are due to take place, we would be happy to assist with any queries you may have about how this may affect your company’s accounts.