ResponsibleBusiness
New year, new rules
A round-up of key changes to accounting regulations set to come into force over the next 12 months
Words Richard Crump Illustration Michał Bednarski
For accounting technicians, 2026 is shaping up to be one of the busiest years for regulatory change in over a decade – ranging from the long-anticipated arrival of Making Tax Digital (MTD) for Income Tax to the largest overhaul of UK GAAP since FRS 102 was introduced.
Add in reforms to corporate governance and stewardship reporting rules, new expectations for tax advisers and impending changes in employment law, and it’s clear that the next 12 months will affect day-to-day practice for firms of all sizes.
“Accounting technicians have several major changes coming in 2026 and the key is to prepare early so the workload doesn’t pile up all at once,” says Nishi Patel, managing director of N-Accounting in Northampton.
“Overall, none of these are small tweaks. They will affect how firms plan their workload, how often they collect information and how they communicate with clients, so early preparation is essential.”
Here is AT’s essential guide to the major rules, regulations and reforms taking effect in 2026.
Making Tax Digital for Income Tax
Coming into force: April 2026
The first mandatory wave of this regime will see the rules apply to self-employed individuals and landlords with income of more than £50,000, who must keep digital records and submit quarterly updates to HMRC using MTD-compatible software. Those earning between £30,000 and £50,000 will join the regime from April 2027.
For many clients, especially landlords and sole traders working from paper, the shift will be significant. Quarterly updates require near-real-time bookkeeping rather than annual catch-up work.
Ben Lee, partner in the crypto tax and accounting team at Andersen LLP, says while this should improve record-keeping over time, it will come at a real cost for many smaller clients who currently rely on low-cost or manual processes.
“Firms should be segmenting affected clients now, choosing appropriate software solutions and reshaping workflows around more frequent reporting rather than the traditional year-end cycle,” Lee says.
UK GAAP and the 2026 FRS 102 overhaul
Effective for periods beginning on or after 1 January 2026
The Financial Reporting Council’s sweeping updates to FRS 102, the backbone of UK GAAP, will apply for periods beginning on or after 1 January 2026 and bring UK standards closer to IFRS.
The changes include a new five-step revenue recognition model and more leases coming on-balance sheet. For most small and medium-sized entities, this will represent the most substantial accounting change since FRS 102’s introduction.
“This will alter key metrics such as EBITDA and gearing, so firms should be identifying affected clients, gathering better data on contracts and leases, and preparing updated accounting policies and templates ahead of the 2026 comparatives,” Lee says.
Revenue recognition
FRS 102 will adopt a revenue recognition framework closely aligned with the IFRS 15 five-step model [see box].
This introduces a more structured process for identifying performance obligations, determining the transaction price, allocating revenue across obligations and recognising revenue as obligations are satisfied.
“For revenue recognition, it is looking at the different revenue streams you have and applying the five-step model to see what impact it will have,” says Emma Birchall, partner at accounting and advisory firm JS in Warrington.
This framework is likely to affect businesses with long-term service contracts, subscription-based models, retainer arrangements and multi-element sales such as a product bundled with installation.
“Firms will need to review revenue recognition policies, check timing differences and update templates and working papers,” Patel says. “Start training teams and reviewing sample files now so the changes do not hit all at once at year-end.”
Lease accounting
In a shift towards the IFRS 16 approach, lease accounting will move on-balance sheet whereby many lessees will be required to recognise a right-of-use asset and a corresponding lease liability.
This will change balance sheet presentation, especially for clients with property, vehicle or equipment leases.
Paul Lodder, of accounting software firm Dext, says the distinction between operating and finance leases will be “almost eliminated”.
“Lessees must now recognise on their balance sheet a lease liability and a right-of-use asset for the majority of leases,” he says. “This shift may affect debt covenants and performance metrics.”
This will alter key metrics such as EBITDA and gearing, so firms should be identifying affected clients, gathering better data on contracts and leases...
Material controls declaration
Effective for periods beginning on or after 1 January
Companies that are subject to or apply the Financial Reporting Council’s revised Corporate Governance Code will be required to provide an explicit annual declaration from boards on the effectiveness of their internal controls.
The updated Provision 29 mandates that boards must monitor and review the effectiveness of their internal control frameworks and provide a declaration regarding their effectiveness in their annual report.
This declaration should also address any material controls that have not operated effectively, along with actions taken or proposed to rectify these issues.
Reporting should include a description of the organisation’s overall approach to its internal control framework, its governance structures and the methods used to identify material risks, including the criteria used.
HMRC’s tax adviser registration standards
Anticipated rollout: May 2026
HMRC published a briefing note following Chancellor Rachel Reeves’ Budget in November 2025, stating that the department will introduce a legal requirement for tax advisers who interact with HMRC on behalf of their clients to register with HMRC and meet “minimum standards”.
Tax advisers will be required to register with HMRC beginning in May 2026, with at least a three-month transition period. Further details on registration timelines and transition arrangements for specific tax adviser groups will be communicated to stakeholders in advance of this period, HMRC said.
HMRC said it will introduce a single digital route to streamline registration, making it faster and delivering one-off cost savings for firms.
However, continuing costs for tax adviser firms will include the requirement to provide annual assurances of HMRC’s minimum registration conditions, including anti-money laundering supervision status and the certification and translation of documents for overseas tax advisers.
Tax advisers who do not meet the minimum standards or registration conditions will be suspended from interacting with HMRC on behalf of clients until they meet the minimum standards
The new requirement will be legislated for in Finance Bill 2025-26 via primary legislation.
The UK Stewardship Code 2026
Effective for periods beginning on or after 1 January 2026
Key features of the code include changes to the definition of stewardship, a streamlined reporting structure and fewer and more targeted principles with shorter prompts for reporting.
The definition of stewardship has been updated to focus on “the creation of long-term sustainable value for clients and beneficiaries”. The FRC updated the supporting language to the definition so that it more closely aligns with the statement of directors’ duties in Section 172 of the Companies Act 2006.
It now goes on to say that investors “take account of long-term risks and opportunities, having regard to the economy, the environment and society, upon which beneficiaries’ interests depend”.
The 2026 code introduces a flexible reporting structure so that signatories have the option to submit separate policy and context (P&C) disclosures, and activities and outcomes reports, or supply them as a combined document.
Signatories will only need to submit the P&C disclosure every four years rather than every year as originally envisioned, but may choose to continue to submit annually.
The code features fewer principles and shorter ‘how to report’ prompts instead of detailed reporting expectations, helping to eliminate ‘box-ticking’ approaches to reporting against the principles.
The FRC said 2026 will serve as a transition year during which no existing signatories will be removed from the signatory list following their 2026 application.
Asset managers and service providers must submit applications by 30 April, while asset owners must submit applications by 31 May. All applications are due by 31 October 2026.
The Employment Rights Bill
Expected implementation: 2026 (subject to confirmation)
The government’s proposed Employment Rights Bill signals significant changes to the UK labour market, with implications for payroll teams, small businesses and any practitioner advising employers.
Though the final form of the legislation has not yet been confirmed by lawmakers, several reforms are likely to come into force from 2026.
According to the government’s implementation roadmap published in July 2025, measures expected to come into force are day one paternity leave and unpaid parental leave, and the removal of the statutory sick pay waiting period, alongside the creation of a Fair Work Agency and new whistleblowing protections.
Further measures expected to come into force by October are the banning of fire and rehire, a requirement to take “all reasonable steps” to prevent sexual harassment in the workplace and the introduction of an obligation on employers not to permit the harassment of their employees by third parties.
“The changes are likely to increase employment costs for many businesses, so accountants should review budgets, update forecasts and make sure clients understand the financial impact as early as possible,” says Patel.
