Every year in the UK, all registered companies must prepare annual accounts and file them with Companies House and HMRC.
These accounts show how the business has performed during the year and establish how much Corporation Tax is payable.
It is the legal responsibility of a company’s directors to make sure the accounts are completed accurately and filed on time – even if you use an accountant. For most one-person companies this will mean filing under the micro-entity regime, which allows simplified accounts. Recent reforms proposed making micro-entities file a profit and loss account publicly, but this change is currently on hold (see below).
What is included in annual accounts?
For larger companies, statutory accounts typically include a balance sheet, a profit and loss statement, notes to the accounts, a directors’ report, an auditor’s report (if required), and the names and signatures of the directors.
See the official requirements guide for more details.
Balance sheet
A balance sheet provides a snapshot of your company’s financial position at a single point in time. It shows assets, liabilities and equity, so readers can understand how the business is funded and how resources are being used.
If total assets do not equal liabilities plus equity, something is wrong in the figures or in the underlying position.
Profit and loss statement
A profit and loss statement shows income and expenditure over a period.
Revenues are listed on one side, while costs, such as salaries, rent, and taxes, are listed on the other.
The difference is profit or loss. Many owners produce monthly and annual profit and loss (P&L) statements to track margins and act early if performance dips.
Company size thresholds from April 2025
From 6 April 2025, the size thresholds increased. If a company meets at least two criteria in a band, it falls into that size category:
- Micro: turnover £1,000,000 or less, balance sheet total £500,000 or less, 10 employees or fewer
- Small: turnover £15,000,000 or less, balance sheet total £7,500,000 or less, 50 employees or fewer
- Medium: turnover £54,000,000 or less, balance sheet total £27,000,000 or less, 250 employees or fewer
These new thresholds apply for financial years starting on or after 6 April 2025 and may alter your reporting and audit position. See the ICAEW update for background.
Filing requirements by company type (current rules)
| Company type | Balance sheet | Profit & loss account | Notes |
|---|---|---|---|
| Micro-entity | ✔️ (simplified) | ❌ (not published) | Minimal notes only |
| Small company | ✔️ | ❌ (summary filed) | Reduced disclosure |
| Dormant | ✔️ (dormant template) | ❌ | No trading activity |
| Medium / large | ✔️ | ✔️ (full) | Full notes + audit if required |
Micro-entities (for most of our readers)
Micro-entities can prepare simpler accounts that meet the minimum statutory requirements. Typically this means a stripped-down balance sheet with minimal notes. A profit and loss account is usually not filed publicly; plans to make the P&L public have been shelved (see below).
Small companies
If your company qualifies as small under the thresholds above, you can typically prepare accounts under the Small Companies Regime.
Certain small companies may also be exempt from audit if other conditions are met.
See GOV.UK guidance on micro and small companies.
Dormant companies
Even if your company has not traded during the year, directors must still deliver dormant accounts to Companies House. See our dormant company guide.
Why the statements matter internally
Statutory accounts satisfy legal duties, but they are also vital management tools.
A P&L shows whether the company is making money or losing it, while a balance sheet shows how it is funded.
Used together, they help you spot overspending, identify products or services that do not carry their weight, and adjust pricing.
Lenders and investors will expect reliable accounts before committing funds. Public sector tenders often require evidence of financial standing.
Accounting reference date and year-end
When you incorporate, your company is given an accounting reference date (ARD).
This is the end of your financial year and is usually the last day of the month of incorporation.
Your first set of accounts typically spans more than 12 months, from the date of incorporation to the first accounting reference date.
Example: If you register on August 1, your first accounting reference date will normally be August 31.
Your first accounts will run from August 1 to August 31 of the following year.
After that, each set covers typically 12 months to the same date.
You can change your year-end by shortening or extending it, subject to limits.
Extensions are generally limited to once every five years, and you cannot change the date if your accounts are already overdue.
You can change the date online or by filing form AA01. See the GOV.UK page on changing your year end.
Deadlines and penalties
- File first accounts with Companies House within 21 months of incorporation.
- File annual accounts with Companies House within 9 months of the financial year end.
- Pay Corporation Tax 9 months and 1 day after the end of the Corporation Tax accounting period.
- File your Company Tax Return within 12 months of the end of the accounting period.
If your accounts are late at Companies House, a civil penalty applies. The fee rises with the delay and is doubled if you file late two years in a row. Current penalty bands are listed on GOV.UK.
Upcoming changes
Software-only filing from April 2027
From 1 April 2027, all company accounts must be filed using commercial software. Web and paper routes will close. See the government’s Changes to accounts hub for details.
Profit and loss filing under review
The Economic Crime and Corporate Transparency Act 2023 introduced rules requiring small companies to publish a profit and loss account, and micro-entities to file both a balance sheet and profit and loss. This would have ended the long-standing exemption allowing the smallest firms to file only a balance sheet and minimal notes.
The reform was scheduled to start with accounting periods beginning on or after April 2026, but has since been paused. Reports in July 2025, including the FT and Guardian, suggest the government may cancel the requirement. See the ICAEW FAQ for the latest position.
Hire an accountant (recommended!)
Directors remain legally responsible for the accuracy of the accounts.
While you can prepare them yourself, many owners hire a qualified accountant to prepare compliant accounts, handle submissions to Companies House and HMRC, and reduce the risk of errors or late filing penalties.
At LCH, we always recommend that, unless you have accounting experience, you should always hire an accountant to manage your accounts.
