FRS 102 for UK small and medium-sized entities
How FRS 102 applies to UK SMEs, with key sections, the small entities regime and recent FRC changes.
FRS 102 is the UK and Ireland Generally Accepted Accounting Practice standard used by the vast majority of unlisted UK companies. It is published by the Financial Reporting Council (FRC) and forms the basis for almost every set of small and medium-sized company accounts filed at Companies House. This guide explains the core sections, the simplified Section 1A regime for small entities, and the headline changes from the FRC’s recent periodic review.
Where FRS 102 sits in the UK framework
| Standard | Used by |
|---|---|
| IFRS | Listed groups, AIM-quoted companies (consolidated) |
| FRS 101 | Subsidiaries of IFRS reporters using IFRS recognition with reduced disclosures |
| FRS 102 | Most unlisted UK SMEs and medium-sized entities |
| FRS 102 Section 1A | Small companies (reduced disclosure) |
| FRS 105 | Micro-entities (further simplified) |
See our existing pages on UK accounting standards and IFRS vs UK GAAP for the wider landscape.
Key sections
FRS 102 has 35 sections. The ones most relevant in a small company:
- Section 1A Small entities regime
- Section 11/12 Basic and other financial instruments
- Section 17 Property, plant and equipment
- Section 18 Intangible assets (excluding goodwill)
- Section 19 Business combinations and goodwill
- Section 20 Leases (post-2026 changes bring an on-balance-sheet model)
- Section 21 Provisions and contingencies
- Section 23 Revenue (replaced by a five-step model from 2026)
- Section 28 Employee benefits and pensions
- Section 33 Related party disclosures
- Section 35 Transition to FRS 102
Section 1A for small companies
If your company qualifies as small (any two of: turnover <= £10.2m, balance sheet total <= £5.1m, employees <= 50), you may use Section 1A. The recognition and measurement rules are the same as full FRS 102, but disclosures are reduced to a legal minimum plus what is needed for a true and fair view.
| Element | Full FRS 102 | Section 1A |
|---|---|---|
| Cash flow statement | Required | Not required |
| Statement of changes in equity | Required | Encouraged |
| Related party disclosures | All material | Only material to controlling parties |
| Directors’ report | Required (unless exempt) | Optional unless required by law |
| Strategic report | Required (medium and above) | Not required |
2026 periodic review changes
The FRC published amendments in March 2024 that take effect for accounting periods beginning on or after 1 January 2026 (early adoption permitted). The two headline changes are:
- Revenue (Section 23) moves to a five-step model aligned with IFRS 15
- Leases (Section 20) moves towards an on-balance-sheet right-of-use model aligned with IFRS 16, with simplifications for short-term and low-value leases
Companies should plan transition now: identify revenue contracts to remap and leases to bring on balance sheet.
Differences from FRS 105
FRS 105 (micro-entities) is much simpler but more restrictive:
- No revaluations of property, plant or equipment
- No deferred tax
- No intangible asset capitalisation (other than goodwill on acquisition)
- No equity-settled share-based payments
- Reduced narrative disclosures
Many growing companies move from FRS 105 to FRS 102 Section 1A as soon as they outgrow the micro-entity thresholds.
Practical implementation tips
- Document your accounting policies in a single, version-controlled file
- Keep a working trial balance that reconciles to the FRS 102 face of accounts
- Run year-end adjustments through clear journal templates
- Maintain a fixed asset register that supports cost, depreciation and any revaluations
- Plan transition for the 2026 changes before you sign off on 2025 accounts
Wrap-up
FRS 102 is broad but most small companies only ever touch a handful of its sections. Pair this with our internal pages on FRS 102 and year-end accounts , and read the FRC FRS 102 page for the standard itself. See pricing if you need accounts production aligned to FRS 102.