Directors’ Report Requirement to Be Removed: What It Means for Your Business

In a move designed to reduce administrative burdens and support business growth, the government has announced plans to remove the requirement for companies to include a Directors’ Report within their annual accounts.

What’s changing?

At present, most limited companies are required to prepare and file a Directors’ Report alongside their annual accounts. Micro-entities are already exempt from this, but under the new plans, the exemption will be extended to all companies — a change expected to benefit around 440,000 businesses across the UK.

In addition:

• Medium-sized private companies will no longer need to prepare a Strategic Report as part of their annual accounts.

• Wholly-owned subsidiaries will also be exempt from preparing a Strategic Report, provided that relevant disclosures are already included in the parent company’s UK annual report and accounts.
  

Why the change?

The government has framed this reform as part of its wider drive to cut red tape, making compliance simpler and less costly for businesses. Estimates suggest that these measures could save UK companies around £230 million each year.

Legislation to implement these changes will be introduced as soon as possible, and further details on timing and scope are expected in due course.

What to do next

For many small and medium-sized businesses, this change will mean less paperwork and a more streamlined filing process. However, it’s still important to ensure that the information you include in your accounts meets all other Companies House and HMRC requirements.

At SJC, Chartered Accountants, we’ll continue to keep clients informed as the legislation develops. Once the new rules take effect, we’ll help you understand how they apply to your company and ensure your reporting remains compliant while taking advantage of the reduced administrative burden.

If you’d like to discuss how these upcoming changes could impact your business, please get in touch with our team.