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New UK GAAP – how does it affect your accounts?

9 Jul 2015

2 minute read

The introduction of new UK GAAP (Generally Accepted Accounting Principles) makes significant changes to the form and content of company accounts. Here we highlight some of the main aspects of the new standards, which came into effect for accounting periods commencing on 1 January 2015.

The main changes result from the introduction of FRS 102 (Financial Reporting Standard 102 – the Financial Reporting Standard applicable in the UK and Republic of Ireland). Qualifying smaller companies can still use a Financial Reporting Standard for Smaller Entities (FRSSE), though for periods commencing 1 January 2016, it is proposed that they will also move onto FRS 102, with a new, simplified, set of rules then introduced for qualifying micro-entity companies.

How could FRS 102 impact on your accounts?

Some aspects of the changes include:

Taxation: One of the most important impacts is on the tax payable on profits. Broadly, tax is

payable on the profits given in the accounts. With certain exceptions, if the accounting profits increase or reduce as a result of a new accounting standard, so does the amount of tax you need to pay. Additionally, deferred tax on revaluations will now be provided for rather than just appearing in a note to the accounts.

Accounts presentation: Some of the detailed content within the accounts may be different and use slightly different terminology under FRS 102. For example, there is a greater chance that related party transactions can be disclosed by category without the need for the names of related parties.

Investment properties: These are properties held not for company use but to make money from, whether by rental income or by eventual sale proceeds. The definition has been widened such that properties which were excluded from the definition (owner occupied investment properties and properties rented to other group companies) are no longer excluded.

Goodwill (and other intangibles): In principle, goodwill should be written off over its estimated life and where that is being done already there may be no change. However, new UK GAAP is stricter in this area which could lead to increased focus on this estimated life. Also, under the new rules, it is more likely that ‘intangible assets’ (other than goodwill) appear in the accounts.

Financial instruments: This is the technical name for a few items that may appear in your accounts such as cash, debtors, creditors, loans payable and receivable and derivatives. Companies may have had financial instruments where new UK GAAP requires a different treatment.

FRS 102 and UK GAAP are complex topics. Please contact Lorna Watson at or call 01865 292200 to find out how FRS 102 could impact your accounts.

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