With 2025 around the corner, you may be wondering how the UK financial reporting amendments 2025 will impact your day-to-day work. These changes cover everything from revised disclosure requirements under FRS 102 to new IFRS rules that may affect how you record leases, revenue, and financial liabilities. Getting prepared early can save you plenty of hassle when the deadlines hit.
Review the major changes
Before diving into the finer points, it helps to see the bigger picture. Here are some highlights that should be on your radar:
- Updates to FRS 102, which bring UK GAAP closer to IFRS, especially in lease accounting and revenue recognition.
- Amendments to IFRS 9, clarifying how and when financial liabilities are derecognised (settled).
- A new approach to FRS 102 disclosures for supplier finance arrangements, effective for periods beginning on or after 1 January 2025, with early application permitted (KPMG).
- Ongoing revisions to IFRS 16-like lease treatment for UK GAAP reporters, with right-of-use assets moving onto the balance sheet (BDO UK).
To stay on top of these changes, it’s a good idea to follow official guidance from bodies like the Financial Reporting Council (FRC) and review published materials well ahead of time.
Focus on FRS 102 updates
FRS 102 is set to undergo some of its most significant revisions yet. Many of these adjustments take effect for accounting periods beginning on or after January 2026, but a few will start as early as 2025. Either way, the clock is ticking. Here’s what you should know:
Lease accounting
If you’re used to splitting leases into operating versus finance, that distinction is going away for lessees. Under the new rules, nearly all leases should be recorded as a right-of-use asset and a corresponding liability. Short-term and low-value leases may still be exempt, but prepare for extra steps in your calculations. You’ll replace historical rental expenses with depreciation on the right-of-use asset and a finance cost on the lease liability.
Revenue recognition
FRS 102 is moving closer to IFRS 15, featuring a five-step model that focuses on transferring control of goods or services. You’ll need to:
- Identify the contract.
- Separate performance obligations.
- Determine the transaction price.
- Allocate that price.
- Recognise revenue upon satisfying each obligation.
This model can shift the timing of revenue recognition, especially if your contracts contain multiple services, warranties, or extended payment terms.
Supplier finance disclosures
Starting in 2025, if you use supplier finance arrangements, you must disclose key terms, carrying amounts, and payment date ranges. You don’t need to present comparatives in the first year of adoption, but keep track of these arrangements carefully. Although the primary effective date for these new disclosures is 1 January 2025, many practitioners are weighing early application if it aligns with other changes in their reporting cycle (KPMG).
Assess IFRS amendments
If you follow IFRS or support clients that do, you’ll see significant revisions in areas like IFRS 9, dealing with financial liabilities:
- Derecognition timing: Financial liabilities are now officially derecognised on the settlement date, when the liability is discharged or expires.
- Optional exemption: You can elect earlier derecognition for electronic payments if specific conditions are met (BDO United Kingdom).
On top of that, be aware that IFRS 21 (Lack of Exchangeability) tax and disclosure rules kick in for periods starting on or after 1 January 2025 (PwC). Make sure you have processes ready for any final adjustments to your foreign currency treatments.
Adapt your processes
You’ll likely need to update both your internal systems and your teams’ skills. For instance:
- Accounting software changes. New features may be required to track right-of-use assets, finance charges, and the five-step revenue process.
- Training for staff. Everyone who touches financial statements should understand the new requirements, from booking transactions to preparing disclosures.
- Contract reviews. If you have long-term or complex sales contracts, break them down to see how the timing of revenue might shift.
Ideally, start a gap analysis now so you can pinpoint any operational changes before you’re in the thick of year-end work. Early planning also helps manage stakeholder expectations, especially if your reported numbers look different compared to previous years.
Prepare now and stay flexible
The upcoming amendments may feel like a whirlwind, but you don’t have to face them alone. Official guidance, external expertise, and thorough in-house planning will go a long way:
- Keep an eye on FRC, ICAEW, and ACCA updates for the latest announcements or clarifications.
- Perform test runs with draft data in your accounting software.
- Communicate with audit teams early about the changes you’re making, so they know what to expect during reviews.
Above all, give yourself room to adjust. As you implement new rules, you might uncover unexpected complexities that warrant fine-tuning your approach. By staying flexible, you’ll minimise any surprises in your final reports.
Quick recap
- You’ll see major shifts in lease and revenue standards under FRS 102, aligning more closely with IFRS.
- IFRS filers face new clarifications on derecognising financial liabilities, especially in electronic payments.
- Disclosure rules around supplier finance arrangements and other aspects of financial statements mean you’ll need to collect more data than before.
Taking the time to prepare now will help your practice navigate these updates with confidence. With awareness, planning, and a willingness to adapt, you’ll be well positioned to tackle the latest regulatory twists and turns in 2025 and beyond.
