The rules that govern how UK companies prepare and report their accounts are being updated. This takes effect for companies whose accounts periods begin on or after 1 January 2026.

This won’t necessarily mean you have to make any changes to how you run your business, but it may mean that we require more information from you in order to adjust how we record certain aspects of your accounts, and what financial information is available on the accounts we produce that are available to the public.

Some of these changes are more relevant to ‘larger’ businesses, several practices and property companies, and are less likely to affect associate companies.

Please note, this update doesn’t provide every change coming, just ones that we feel will affect dental businesses the most.

Key Dates

The new rules apply to accounting periods beginning on or after 1 January 2026. Importantly, your 2025 figures will need to be restated as ‘comparatives’ alongside your 2026 accounts, which means in practice the changes often bite from 2025 onwards. For example, if we are preparing your year end accounts for 31 December 2026, we will have to apply certain changes to the previous ‘comparative’ year (31 December 2025).

Changes to leases

This is the change most likely to affect you, and the one you’ll need to provide information on to ensure it’s properly implemented

Under the current rules, most business leases (for offices, warehouses, vehicles, equipment, etc.) are kept ‘off the balance sheet’ – they are simply recorded as a rental expense each year. Under the new rules, almost all leases must appear on your balance sheet as both an asset and a liability. Please note that leases do not include hire purchase or other finance agreements whereby assets are paid for in instalments for a certain period and become your property.

• Example – imagine you rent a unit for £12,000 per year on a 5-year lease.
• Old Rules – you simply show £12,000 as a rent expense each year. Nothing appears on the balance sheet.
• New Rules – we calculate the ‘present value’ of your total remaining lease payments. This amount appears as a ‘right-of-use asset’ on your balance sheet, and an equal lease liability is also shown. Each year, the asset is depreciated and the liability reduces, like how a mortgage works.

What this means in practice

Your balance sheet will look larger, both your assets and your liabilities will increase. This is not necessarily a bad thing, but it is important if you have bank covenants, loan agreements, or any financial ratios to maintain. Your profit and loss account will also look slightly different. Instead of a single rent expense line, you will see two separate charges:

• depreciation of the right-of-use asset, and
• interest on the lease liability.

In the early years of a lease, the combined total of these two charges tends to be slightly higher than the old straight-line rent figure, evening out over the life of the lease. If you closely monitor your profitability or report against budgets, it is worth being aware of this.

If we are your accountant, we’ll need the following information from you

To carry out the calculations as mentioned in the ‘new rules’ above, we will need a copy of the lease agreement (if you have not already provided one). From this document we should be able to extract the following which is required in the calculations:

• The lease start date and end date
• The total monthly or annual payment
• Whether there are any rent-free periods, stepped increases, or break clauses
• Whether there are any options to extend and whether you are reasonably certain to exercise them
• Any lease incentives received from the landlord (e.g. a rent-free period at the start)

IMPORTANT NOTE: Some leases are exempt from the new rules and can be recorded as simple expenses. Examples of this include small pieces of equipment (Approx. less than £5k in value), and or leases that have a total term of 12 months or less.

Changes to ‘related party disclosures’

A related party disclosure is simply a formal note in your annual accounts that tells the outside world (like HMRC, banks, or credit agencies) about transactions between the company and those individuals known as ‘related parties’ (close family members, other companies you own or control, directors and majority shareholders).

In general, previous rules meant that any loans between the company and the related parties were only required to be disclosed if the loan was ‘unusual’, ‘nonmarket rate’ and certain specific directors’ loans. If you had two companies that had a £500k loan between one another, if the loan was carried out under a commercial rate, no disclosure was required.

The new rules require anything ‘material’ to be reported, regardless of their commerciality status. On top of this, even if loan balances are nil at the end of the accounting period, if the company has carried out a transaction of any material sort with any related party, the relationship of that entity must be disclosed and a simple note explaining the transactional details (what was paid and what for etc).

IMPORTANT NOTE: This won’t likely mean that anything extra is needed from you in order to make these extra disclosure notes, but it’s important that you know what is made available to the public in the annual accounts.

Changes to dividend disclosure

Put simply, there has previously not been any requirement to disclose dividends paid to shareholders in the financial accounts.

The new rules mandate that dividends paid to shareholders in the accounts must be disclosed. The exact details of what needs to be displayed is the total aggregate cash amount of the dividends paid out during the period, along with a ‘per share’ figure displaying the different amounts paid out per share class.

This is a significant change from the old rules as your dividends paid to shareholdings will now be displayed to the public. It is worth emphasising that this disclosure is simply a note within the accounts – it does not change how dividends are taxed, processed, or paid. It is a transparency measure only.

IMPORTANT NOTE: Inter group dividends between the practice and holding company don’t require reporting under the wholly owned subsidiary exemption, provided the holding company owns 90% or more of the shares. Please check with us if you are unsure whether this exemption applies to your group structure.

Any questions?

If you’re a client of Hive, we will be in touch to request any information we will need. As always you can reach out to our support team at any time if you have any questions about this.

If you’re not yet a client of Hive and you feel overwhelmed by the changes coming or your existing advisor isn’t keeping you up to date with what you need to do, book a call with us to find out how to switch to Hive.