Modernising UK Corporate Reporting: Company Categories, Thresholds And Exemptions

On 7 September 2026, the government published a Consultation on modernising corporate reporting to support long-term economic growth. Our initial posts looked at the proposed introduction of a solvency-based regime, which would be used to determine the legality of dividends, and the proposals for fully virtual general meetings. This piece looks at the suggestion that company categories, thresholds and exemptions for the reporting framework are simplified.

What is being suggested?

• Removing the distinctions between small and medium-sized companies, allowing medium-sized companies the ability to access a wider number of exemptions (for example the exemption from the requirement for financial reports to be audited).
• Some smaller insurers to benefit from some or all of the exclusions which apply to micro-entities and small and medium-sized companies.
• Adapting the definition used for the employee threshold test to refer to the average number of employees or the average number of full-time equivalent employees. Alternatively, it could be changed to reflect the different workforce models (for example, contractors, agency workers and part-time workers) which currently exist.
• The creation of a new “very large” companies category for certain non-financial reporting obligations to make the framework easier to understand and apply.
• Whilst the changes being considered would not apply to the audit regime for Public Interest Entities (which are judged to require the highest level of scrutiny), the government is considering allowing an increased number of PIE subsidiaries to use reporting exemptions.

Why? The consultation paper notes that “the Companies Act 2006 contains multiple different definitions, thresholds, ineligibility criteria and exclusions that determine which companies must report particular types of information. Many companies find it difficult to identify which reporting requirements apply to them, and it is difficult for investors and creditors to know what reporting to expect.” This complexity is inconsistent with the drive to create a simple and coherent reporting framework.

What would this mean in practice?

• It will be clearer and easier for companies to identify which reporting requirements apply to them, which should hopefully improve the level of compliance.
• A greater number of companies will benefit from exemptions to reporting requirements, particularly medium-sized companies, smaller insurers and subsidiary companies sitting within larger groups. By changing the definition of “employee”, this metric will determine the size of a company more accurately and so the expectation is that the corresponding reporting requirements will be applied more appropriately. The purpose of these adjustments is to reduce the burden of corporate reporting in a way which is proportionate to the relevant companies involved. This should, in theory, improve the standard of corporate reporting.

Would this apply to financial and non-financial reporting requirements? Whilst we do not have the specific details, we understand that these reforms would affect requirements under both the financial and non-financial reporting frameworks.

Is any more detail available this stage? No.

What should I do now? If you are interested in this area or are responsible for corporate reporting within an organisation, then you should consider responding to questions 9 to 14 of the consultation.

How long do I have to respond to the consultation? The consultation will close at 11:59pm on 30 November 2026.