FRS 102 has been through its second periodic review, bringing UK GAAP closer to international standards. The two biggest changes are to revenue recognition, which now follows a five-step model similar to IFRS 15, and leases, where almost all leases move onto the balance sheet as right-of-use assets and liabilities, similar to IFRS 16. Disclosure requirements have expanded alongside both.

For accounting periods beginning on or after 1 January 2026. Early adoption is permitted, provided all the changes are applied together, though few businesses are choosing to adopt early.

If you report under FRS 102, yes – the changes apply broadly rather than to a narrow set of businesses. How much you feel it depends on your circumstances: businesses with leases, multi-element contracts, milestone billing, or performance-based pricing will see more change than those with simple, single-element sales.

The previous risks-and-rewards approach is replaced with a five-step model: identify the contract, identify the performance obligations, work out the transaction price, allocate it across obligations, then recognise revenue as each obligation is satisfied. In practice, this means looking closely at bundled contracts, your contractual right to payment for work done, and any pricing that varies with performance.

Lessees now recognise a right-of-use asset and a matching lease liability for almost all leases, rather than treating rent as a straightforward cost in the profit and loss account. This changes how depreciation and finance costs appear in your accounts, which in turn affects EBITDA, net debt and any covenant calculations tied to those metrics

More than before. Revenue disclosures now need to explain your performance obligations, when they’re satisfied, and any contract balances. Lease disclosures need to cover right-of-use assets by class, lease liability movements, and the judgement behind your lease term and discount rate. Increasingly, it’s the judgement itself that needs explaining, not just the resulting numbers.

Because the year end isn’t really the trigger point. If your accounting period began on or after 1 January 2026, the treatment you’re using for this year’s management accounts, forecasts and covenant tests is already under the new rules, whether or not your statutory accounts have been drafted yet. Waiting for your auditor to raise it is the most expensive way to find out something needs to change.

We bring audit, tax, business advisory and CFO expertise together, rather than answering from one technical angle alone. That means understanding not just what’s changed in the standard, but what it means for your reported profit, tax position, funding conversations and management reporting, from one trusted point of contact, backed by specialists where you need them.