Modernising UK Corporate Reporting: Financial And Narrative Reporting Reform

On 7 September 2026, the government published a Consultation on modernising corporate reporting to support long-term economic growth. Our team has published a short series of posts on key aspects of the consultation (listed below) but this update will focus on the suggested reforms to the financial and narrative reporting frameworks. These are potentially significant and comprise two chapters of the consultation.

What is being suggested? The consultation is looking at whether (1) the connection between company law and accounting standards should be simplified and (2) the UK’s narrative reporting framework could be updated so that it is less prescriptive in form and content.

What would this mean in practice? The consultation sets out a number of possible reforms, some of which are summarised below.

Financial reporting

• Accounting standards would be the single source setting out financial reporting obligations. In turn these requirements would be removed from the Companies Act 2006, which would be amended to simply identify which reporting standards should be used by each type of company.
• Only four accounting standards would be available to UK companies. As noted above, the Companies Act 2006 would prescribe which standards are to be used by each type of company as well as the primary financial statements to be required in the accounts.
• Reporting exemptions for small companies and groups to be extended to medium-sized companies.
• Financial statement audit would not be required where the risk to investors and creditors doesn’t justify the cost.
• The current rules on distributable profits to be replaced with a new solvency-based regime (as described further in our article here).

Narrative reporting

• Measures to ensure that only material non-financial reporting is included in the annual report.
• A principles-based framework for the strategic report with five baseline narrative disclosures. This would replace certain requirements under the Companies Act 2006, including the obligation to include the s.172 statement.
• A clear threshold to be set as to which companies are required to report the baseline strategic information referred to above.

Is any further detail available at this stage? Yes, further information about the possible reforms is set out in chapter 4 and 5 of the consultation.

What should I do now? If the reform of the financial and narrative reporting frameworks is of relevance or interest to you, then consider responding to some or all of questions 15 to 33 in the consultation.

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