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Upcoming Changes To UK Accounting Standards.

The Financial Reporting Council (FRC) has recently completed its triennial review of UK accounting standards (FRS102), and published the amendments which be applicable for periods commencing 1 January 2026.


John Coates


May 2nd, 2024

These changes are focused on reducing the financial reporting differences between UK GAAP and International Financial Reporting Standards (IFRS).

There are several amendments included in the latest triennial review. However, the main areas of relate to the recognition, presentation and disclosure of both revenue and leases and can be summarised as follows:


Revenue will need to be recognised in line with a five-step model as follows:

  1. Identify the contract(s) with a customer

  2. Identify the performance obligations in the contract

  3. Determine the transaction price

  4. Allocate the transaction price to the performance obligations in the contract

  5. Recognise revenue when (or as) the entity satisfies a performance obligation

Under this model, distinct goods or services promised to a customer will need to be identified, and the associated revenue will be recognised when an entity satisfies the obligation to transfer those goods or services to the customer. As such, these changes could particularly impact those companies that recognise revenue of the life of a contract or similar arrangements.


These amendments introduce a new lease accounting model aligned with IFRS 16, which will require lessees to recognise all leases on the balance sheet, except for short-term and low-value leases. This model includes:

  • Right of Use (RoU) asset: Lessees will recognise an asset reflecting their right to use the leased asset over the lease term

  • Lease liability: Lessees will recognise a lease liability reflecting the obligation to make lease payments

Lease expenses will now be presented as depreciation and interest, impacting EBITDA and key metrics.

Transition Provisions

For both revenue recognition and lease accounting, no restatement of comparatives will be required. In relation to revenues, entities will need to apply the guidance only to contracts open at the transition date and thereafter. For any ongoing leases, the asset recognised will be equal to the liability on transition, with any cumulative effect of initially applying the standard recorded as an adjustment to opening retained earnings.

Potential impacts of the amendments to UK GAAP

These changes are set to provide greater consistency with international standards and will have significant implications for financial reporting, tax obligations, and external stakeholder reporting (such as covenant compliance for funders). It is therefore crucial for businesses to understand the potential impact of these amendments early, prepare for their implementation, and begin discussions with stakeholders where required.

Need more information?

If you want to learn more about how the upcoming amendments to FRS102 may impact your business, get in touch by simply completing our enquiry form