{"id":11214,"date":"2023-12-22T17:19:05","date_gmt":"2023-12-22T17:19:05","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=11214"},"modified":"2024-03-05T09:48:38","modified_gmt":"2024-03-05T09:48:38","slug":"small-companies-annual-accounts-filing-changes","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/small-companies-annual-accounts-filing-changes\/","title":{"rendered":"The way small companies file annual accounts is changing"},"content":{"rendered":"
New changes are being implemented in 2025 which means the way small companies (including micro-entities) file their annual accounts with Companies House will be changing. <\/span><\/p>\n In this article, we look at the new filing requirements and impact they will have on small businesses. Let\u2019s get started.<\/span><\/p>\n Two main changes are being introduced:<\/span><\/b><\/p>\n You will no longer be able to file annual accounts via paper with Companies House. You will also not be able to use Companies House WebFiling or CATO (Company Accounts and Tax Online), the Companies House and HMRC joint filing service.\u00a0<\/span><\/p>\n Instead, annual accounts must be delivered through pre-approved software. <\/span>See here for a list of software that Companies House has tested<\/span><\/a>.<\/span><\/p>\n For companies that must use the paper filing method because their accounts are complex, Companies House is upgrading its upload facility so that it can handle zip files (this is expected to go live in 2024).<\/span><\/b><\/p>\n Small companies will need to include profit and loss accounts (something not previously required) as part of their annual accounts, plus a director\u2019s report.\u00a0<\/span><\/p>\n Micro-entity companies will also need to include profit and loss accounts (again, something not previously required) as part of their annual accounts; however, a director\u2019s report will not be necessary (but is optional).<\/span><\/p>\n The option for companies to file abridged accounts will be removed. Whilst dormant company accounts will still be permitted for companies that have not taken part in any trading activity, these must be accompanied by a statement that confirms the company qualifies for an audit exemption.<\/span><\/p>\n When it comes to filing annual accounts, a company is classified as a small company if it meets two of the below criteria:<\/span><\/p>\n A company is classified as a micro-entity if it meets two of the below criteria:<\/span><\/p>\n As these figures would suggest, the majority of the Companies House public register is made up of small companies and micro-entities.<\/span><\/p>\n The annual account updates are being introduced in phases.\u00a0<\/span><\/p>\n The current expectations are that the profit and loss account requirements for small companies and micro-entities will be introduced in early 2025 (secondary legislation with more detail will be issued before this).<\/span><\/p>\n Software-only account filing is expected to come into force by the middle of 2025.\u00a0<\/span><\/p>\n The changes make up part of <\/span>The Economic Crime and Corporate Transparency Act<\/span><\/a> (ECCTA).\u00a0<\/span><\/p>\n The Act aims to \u2018improve transparency over UK companies and other legal entities in order to strengthen our business environment, support our national security and combat economic crime, whilst delivering a more reliable companies register to underpin business activity.\u2019<\/span><\/p>\n Software-only account filing is a more traceable, secure, and reliable method when compared to paper filing. Plus, it\u2019s more sustainable. The majority of companies already use software filing, so making it compulsory shouldn\u2019t cause too many problems.<\/span><\/p>\n The requirement for small companies and micro-entities to \u2018open up\u2019 and file profit and loss accounts is being implemented to remove the element of disclosure that has, arguably, previously appealed to fraudsters. It will also enable other businesses to be more diligent regarding who they do and don\u2019t operate with, as more financial information will be available.<\/span><\/p>\n However, critics argue that this is simply adding another task to the to-do list of the UK small business owner, and could result in larger companies taking advantage of their smaller counterparts, as they will gain more financial insight.<\/span><\/p>\n All companies must file annual accounts whether or not they are trading. The deadline for filing annual accounts is 9 months after the end of the company\u2019s financial year. However, the first set of accounts after incorporation is due 21 months after the date of incorporation.\u00a0<\/span><\/p>\n What changes are being made?<\/h3>\n
1. Paper filing of annual accounts is being stopped<\/h4>\n
2. Small companies and micro-entities must provide profit and loss information<\/h4>\n
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What is a small company?<\/h3>\n
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What is a micro-entity?<\/h3>\n
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When are the annual account changes taking place?<\/h3>\n
Why are these changes being made by Companies House?<\/h3>\n
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How Quality Company Formations can help<\/h3>\n