Big Changes Ahead: Profit & Loss Disclosure for Small and Micro Companies from 2027

From 2027, Profit & Loss Disclosure for Small Companies, will require small and micro limited companies in the UK to publicly file their Profit & Loss (P&L) account on Companies House.

For many businesses, this is a significant shift. Under current rules, small and micro companies can file abridged or filleted accounts, keeping P&L details private. But the Economic Crime and Corporate Transparency Act 2023 introduces reforms aimed at improving corporate transparency and reducing financial crime.

Let’s look at what’s changing — and what it might mean for your business.

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What’s Changing?

• Mandatory filing of P&L: Even small and micro companies will have to submit their P&L to Companies House.

• Public record: These P&L accounts will become publicly accessible.

• No more filleting: The option to exclude P&L data from the public record will be removed.

This applies to financial years starting on or after the implementation date (anticipated in 2027).

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What Does “Reporting the P&L” Actually Mean?

When we talk about reporting the Profit & Loss (P&L), we’re referring to the need for a company to submit a detailed summary of its income and expenses to Companies House — and make that summary publicly available Economic Crime and Corporate Transparency Act 2023.

Previously, many small and micro companies could file what are called “filleted accounts,” meaning they could leave out the P&L and just submit a basic balance sheet with minimal detail. That’s what’s going away.

Here’s what a publicly reported P&L typically includes:

🔹 Turnover (Revenue) – The total sales or income earned from trading.
🔹 Cost of Sales – The direct costs of delivering your products or services (e.g. materials, subcontractors).
🔹 Gross Profit – Turnover minus cost of sales — shows how efficiently the core business is running.
🔹 Administrative Expenses – Overheads like rent, salaries, insurance, marketing.
🔹 Operating Profit – What’s left after running costs are deducted.
🔹 Net Profit Before/After Tax – The final bottom-line figure — what the business has truly made in profit after all costs and taxes.

This P&L tells a story about your company’s performance — and once it’s published, anyone can see it: employees, suppliers, competitors, journalists, or even potential fraudsters.

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Key Buzzwords to Understand

Here are a few financial terms that will become more familiar once P&L accounts go public:

🧾 Gross Margin – A percentage showing how much profit is made after direct costs. Often used by competitors to benchmark pricing.
💰 Retained Earnings – Accumulated profits that haven’t been paid out as dividends — often misunderstood as “cash in the bank.”
📉 Profitability Ratios – Anyone looking at your accounts can calculate how profitable your business is (e.g. net profit margin).
📊 Director Remuneration – Some companies report high director pay even in low-profit years — easily visible in public filings.

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Why Does This Matter?

Many small companies have historically valued privacy over their financial results. Having small companies disclose their profit & loss information publicly available could create practical and commercial challenges:

✅ Staff Relations

• Employees might see healthy profits and assume the business can afford big pay rises or bonuses.

• It could lead to tension if staff perceive “underpayment” relative to profits.

✅ Supplier Negotiations

• Suppliers could push for higher prices or less favourable terms if they know your margins are strong.

• Conversely, if profits look low, suppliers may reduce credit terms.

✅ Competitor Insight

• Competitors gain valuable intel about your turnover, margins, and cost structure.

✅ Customer Pressure

• Large customers might use profit visibility as leverage in pricing negotiations.

✅ Stakeholder Perception

• Potential investors or lenders may scrutinise published figures, sometimes without the full context (e.g. one-off costs, R&D investment).

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Can Companies Avoid Profit and Loss Disclosure?

For many directors, the natural question is: “How can we keep our profits private?”

One legal route is to use an alternative trading structure rather than a limited company. However, each option comes with trade-offs.

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Option 1 — Operate as an LLP (Limited Liability Partnership)

• LLPs can still file “small LLP” accounts, but they do have to file a P&L, just like small limited companies will. So this won’t avoid disclosure.

• LLPs also attract more complex tax and legal requirements.

✅ Pros:

• Flexibility in profit sharing

• Transparent partnership structure

❌ Cons:

• Still requires public P&L filing

• Partners taxed as self-employed, potentially higher tax rates

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Option 2 — Use a Holding Company Structure

Some businesses might consider operating through a group structure:

• Profits remain within a holding company, while operating subsidiaries report lower profits.

• However, group accounts may still reveal consolidated results, and tax anti-avoidance rules apply.

✅ Pros:

• Can separate activities for commercial or tax planning

• Some protection of sensitive commercial details

❌ Cons:

• Complexity and cost of group structure

• Disclosure might still occur in consolidated accounts

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Option 3 — Keep Profits Lower via Bonuses or Pension Contributions

Directors might look to reduce reported profits by:

• Paying bonuses to directors or staff

• Making pension contributions

• Investing in growth initiatives

✅ Pros:

• Legitimate tax planning

• Lower profits reduce visibility of large surpluses

❌ Cons:

• Must be commercially justifiable

• Excessive extraction can create cash flow strain or tax risks

• Might not fully “hide” turnover levels

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The Upside of Transparency

While there are concerns, there are also advantages to filing a P&L:

• Greater credibility with lenders, investors, and customers

• Reduces suspicion of hidden activities or tax avoidance

• Demonstrates financial resilience to stakeholders

• May improve business valuations for sale or investment

Some businesses may embrace transparency as part of their brand and corporate reputation.

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What Should Directors Do Now?

✅ Plan ahead. The changes aren’t in force yet — but review how your financial results might appear publicly.

✅ Review remuneration strategies. Look at director salaries, bonuses, and pension contributions as part of year-end planning.

✅ Consider corporate structure. Speak with your accountant or legal adviser about the pros and cons of group structures or alternative entities.

✅ Get used to narrative. Be prepared to explain profits to staff, suppliers, and other stakeholders. A good narrative can help manage perceptions.

✅ Stay compliant. Don’t be tempted to artificially suppress profits — this risks tax enquiries and penalties.

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In Summary:

The mandatory filing of P&L for small and micro companies from 2027 is a big change that could affect how businesses manage relationships with staff, suppliers, and competitors.

While there are potential downsides to commercial privacy, good planning and professional advice can help directors navigate the transition smoothly — and even turn transparency into a competitive advantage.

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References & Further Reading

• Companies House — Corporate Transparency and Register Reform
  https://www.gov.uk/government/collections/corporate-transparency-and-register-reform

• Companies House Guidance — Filing your Company Accounts
  https://www.gov.uk/file-your-company-accounts

• ICAEW — Companies House reforms: Economic Crime and Corporate Transparency Bill
  https://www.icaew.com/insights/viewpoints-on-the-news/2023/jul-2023/Companies-House-reforms-Economic-Crime-and-Corporate-Transparency-Bill

• Gov.uk — Changes to UK Company Law: What You Need to Know
  https://www.gov.uk/government/news/changes-to-uk-company-law-what-you-need-to-know

Need help preparing for these changes? Our team is ready to help you review your options and plan ahead. Get in touch for a confidential chat:

📞 Call us at: 01277 236 246
✉️ Email us at: info@plan-a.co.uk
🌐 Visit our website: www.plan-a.co.uk