From April 2028, small businesses and micro-businesses/micro-entities will need to file profit and loss with Companies House.

If you’re registered with Companies House, look out for an email to your registered address which will provide more information. In the meantime, we’ll outline the profit and loss basics along with the other new accountancy rules that are coming in.

What is a profit and loss statement?  

A profit and loss (P&L) statement is usually prepared annually and shows revenues and costs and how much profit has been made over the period.

Learn more by reading our Profit and loss template guide.

At the moment, limited companies are expected to file profit and loss – and have it published. Small and micro companies can choose to opt out of putting these figures on the public register once the time comes.

Companies House argues that the ability to publish your profit and loss will enhance transparency and give your business greater access to funding. However, some small and micro businesses would prefer not to have that information in the public domain.

Steven Mather, lawyer and director at Steven Mather Solicitor, said: “So Companies House is back to wanting every small business owner to bare their profit and loss to the world, but after a collective howl from the business community, now proposes graciously to let you keep it secret. Generous.

“The reform has been watered down so many times since 2023 it is practically homeopathic. You will now need to buy software just to file the accounts you have been filing for free for years. Yet more unnecessary burden on small firms with no material upside to them.”

Colette Mason, AI ethics consultant at Clever Clogs AI, points out that there will be data protection concerns: “For solopreneurs and owner-managed businesses, the reforms raise important privacy concerns around the collection and storage of essentially sensitive personal financial data.

“Many small business owners operate in competitive markets and value financial confidentiality. As the reforms are implemented, government must work with small businesses to minimise compliance costs, strengthen privacy protections and strike the right balance between transparency and practicality.”

What else is changing?

Small businesses will be required to make other changes to their accounting from April 2028.

File annual accounts with commercial software

All businesses will need to file accounts following the Inline eXtensible Business Reporting Language (iXBRL) format by using commercial software.

This applies both to businesses who file their own accounts and those who use accountants or third-party agents to file their accounts.

Web and paper-based account filing with Companies House will be discontinued. However, it will still be available for non-account filings, such as confirmation statements and updates to director details.

Component parts of the filed accounts and reports must be filed together

Pretty self-explanatory, but get everything together before you file.

You won’t be able to file abridged accounts anymore

An abridged account is a simplified version of a company’s annual account, sometimes preferred by small businesses.

You’ll need a strengthened eligibility statement when claiming an audit exemption

An eligibility statement is required when claiming an audit exemption. The director must identify which exemption their company meets or confirm that they meet all of the exemptions. These exemptions are being a small business, micro-entity or dormant business.

You won’t be able to shorten your accounting referencing period as often

At present, you can shorten your company’s financial year as many times as you like, except if its accounts are overdue. Details of how this will change haven’t been released yet.

What do entrepreneurs make of the reforms?

Small business owners have had mixed feelings about this news overall. For some, there’s hope that it will reduce fraudsters and foul play. For others, it’s just more paperwork at a time when they’re already struggling.

Tony Redondo, founder at Cosmos Currency Exchange, said: “From a bureaucrat’s perspective, mandating commercial software and unified filing will modernise the register, produce accurate machine-readable data, and close loopholes historically exploited by shell companies to mask illicit financial flows.”

Though she agreed with some of the positives, Kate Underwood, founder at Kate Underwood HR and Training, said: “Here we go again. Another layer of admin, lovingly gift-wrapped as transparency. April 2028 feels miles off. It isn’t. Ring your accountant now, not in the 2027 stampede.”

Thank you to Newspage for supplying the above quotes.

Read more

What is a profit and loss forecast, and why do you need one? – Here, we look at why it makes good commercial sense to gather the right data and create a formal calculation of potential profit or loss