Reporting Relief Ahead: Who benefits from the UK’s 2026 changes?

The Government is introducing three significant changes to non-financial reporting requirements that will primarily impact medium-sized companies in the UK. The initiative stems from a trend identified by the Sunak Government where inflation, rather than business growth, pushed smaller companies into more burdensome reporting thresholds.[1] The bipartite solution was first to increase the thresholds for accounting periods beginning on or after 6 April 2025 so that more companies can benefit from the reporting exemptions available to ‘medium-sized’ companies; and second, to remove redundant reporting requirements from all companies.[2]

While part one was executed in April 2025, a number of non-financial reporting reforms are expected in 2026 to launch part two of the plan, including:

1. To exempt most medium-sized private companies, which already benefit from certain existing exemptions, from producing a strategic report;
2. To exempt wholly owned subsidiaries from producing a strategic report where the required disclosures are included in the annual report of their UK parent; and
3. To remove the requirement for all companies to produce a directors’ report with some useful reported information, such as reporting on energy and emissions, retained but included elsewhere in the annual report.[3]

In his October 2025 written statement, the Minister for Small Business and Economic Transformation reported that increasing the monetary size thresholds by approximately 50% had already enabled up to 132,000 companies to benefit from lighter touch reporting requirements. Over the next four years, the Minister expects the proposals above to reduce the complexity of regulation and associated uncertainty across the regulatory system, and suggests they will cut administrative costs related to these obligations by 25% (approximately £5.6bn per year).

By streamlining the often fragmented way in which annual reports are currently prepared by different teams within a company, we anticipate that these changes will eliminate duplicative and boilerplate disclosures, improve internal coordination and refocus annual reports on decision-relevant information for the benefit of investors and creditors. 

Ahead of these changes, companies are advised to assess whether they qualify for any exemptions, identify which disclosures will be removed in their next annual report cycle, and monitor legislative updates expected in 2026.