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P&L reporting for small businesses will not go ahead
Government backs down on plans to require smallest businesses to file profit and loss accounts, and balance sheets at Companies House.
The decision to ‘pause’ the controversial new reporting requirement was dropped ahead of the Budget as the prime minister Andy Burnham met with small business leaders in the new No10 North.
The planned start date of April 2028 has now been abandoned, with the government saying the accounting changes are now on pause. This is the second time the measure has been delayed.
This means that small and micro businesses will no longer be required to file profit and loss (P&L) accounts with balance sheet information, which was due to be mandatory from 1 April 2028.
The government acknowledged ‘concerns about filing information separately at Companies House and HMRC, and duplicative filing requirements’. It pitched the decision to drop P&L accounts as a cornerstone of its drive to cut regulation, saying it was key to ‘implement the government’s “Tell Us Once” ambition, including by pausing the Companies House profit and loss filing requirement for April 2028’.
The government confirmed: ‘We have therefore decided to pause implementing the P&L filing requirement while we explore options to streamline Companies House and HMRC filing processes under the “tell government Once” ambition.
‘We will provide further details about this in due course.’
The Tell Us One programme aims to replicate the existing individual consumer service which is used to advise all government bodies of a death, without repeatedly informing different organisations of the same information.
The move is part of a wider initiative ‘further simplifying corporate reporting requirements, reducing reporting burdens for firms’. It claimed the decision could save businesses operating as part of a wider national group up to £20,000 a year in compliance costs with a potential total saving of £290m annually overall.
There is no information about the specific cost savings for small businesses but this should be a welcome move as there had been significant pushback against the new transparency requirements for annual reports filed at Companies House.
This is part of the government’s effort to reach out to businesses in the run-up to the Budget, after they have been hit with soaring tax bills due to employer national insurance hike from April 2025, increased employment costs due to the introduction of sweeping day one rights for employees and the wider impact of the highest energy prices in the G20.
Speaking at No10 North, the PM Andy Burnham said: ‘If you run a business, you want to spend your time serving your customers, creating jobs and growing your firm, not filling in unnecessary forms.
‘It’s not right that pointless bureaucracy gets in the way of people working hard to build something that matters to their high street.
‘So we’re getting government off their backs and giving businesses the breathing space to grow. Because when businesses succeed, they create good jobs, strengthen their communities and bring growth to every part of the country.’
Immediate reaction from the small business community was positive.
Tina McKenzie, national chair at the Federation of Small Businesses (FSB) said: ‘Pausing the plans for full profit and loss accounts to be filed at Companies House by the smallest businesses is a huge step in the right direction, averting a huge new weight of red tape on the very businesses with the fewest resources to deal with it.
‘Currently, the weight of compliance can be a struggle, costing time, money, and stress that small businesses can ill afford.’
The decision to drop P&L accounts requirement for financial ye08ars commencing 1 April 2028 was one of the key recommendations of the Small Business Taskforce. Whether the proposal will be resurrected in the future is questionable.
Rain Newton-Smith, CBI chief executive, said: ‘The Government’s acceptance of the Small Business Taskforce’s recommendations, alongside progress on corporate reporting reform, is a welcome step towards giving smaller firms more time and headroom to focus on their businesses.
‘The test now is delivery. Cutting unnecessary admin can free firms to invest, compete and grow – and business will want to see that ambition translated quickly into meaningful reductions in the burden they face.’
Tax questions
But annual accounts are not the only area where small businesses are facing high compliance costs. There are also calls to delay the extension of Making Tax Digital (MTD) for Income Tax for sole traders and the self employed with income of only £20,000. This is also due to come into force from April 2028 adding further compliance costs while they will still have to file an annual self assessment tax return on top of MTD quarterly reporting.
The reporting changes are part of the government’s plan to cut the administrative burden of regulation on businesses by 25% by the end of parliament, latest July 2029, designed to save businesses with employees 280 million hours per year.
In addition, import tariff suspensions on more than 250 products introduced due to the ongoing Iran war have been extended, and procurement regulations will be changed to make it easier for small companies to bid for public sector contracts by standardising requirements in sectors such as construction.
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