Your company must file an income statement

While the effective date is, as yet, unknown, new legislation for small companies has been passed into law. 

In future, small companies will be required by Companies House to file their profit and loss account/income statement in their annual accounts, rather than just the balance sheet. These accounts are publicly available on the Companies House website, ‘for all to see’.

 It is anticipated that the changes may be introduced as soon as late 2025/early 2026.

The Economic Crime and Corporate Transparency Act that is driving this change aims to support the economy by providing more and better-quality information to inform business transactions and lending decisions.

Another ambition of the government is to achieve a ‘file once’ approach; however, this change does not appear to align with that objective – full accounts with profit and loss details are already collected by HMRC, another arm of government, with corporation tax returns.

The additional information being made public could have unwanted consequences for company owners or managers. 

Anyone can search the Companies House website, and they will be able to see revenue and profit margins. For some company owners, the information might give a clear indication of their personal income, akin to someone posting their P60 on social media. 

There may yet, however, be a potential reprieve for some.

While the Act requires small companies and micro-entities to file their profit and loss accounts, it also includes a regulatory power that enables these profit and loss accounts (or parts of them) to not be made available for public inspection. 

How, or in what circumstances, this might be applied in practice is still being considered.

However, as the current rules are that anything filed at Companies House, even in error, cannot be removed, there is a concern that information supplied could be published in error. 

Therefore, it is hoped that stringent measures will be taken by Companies House to ensure that information that continues to be confidential remains as such and also, as a ‘long stop’, that they introduce protocols that enable the removal of information publicly disclosed in error; moreover, that such confidential data will be kept as such.

At a time when businesses in the UK are already dealing with uncertainty from tariffs, the economic environment, geopolitical issues and the burden of extra taxes on employing people, this may come as an unwelcome, and in some cases costly, change, both in terms of administrative cost and commercial risk.

Business owners should seek advice on the implications of the additional disclosures and consider this as early as possible. There may be options which will necessitate change, and the earlier that these are identified, the better!

Please get in touch with Talitha Gibney or your usual Crowe contact to discuss further.