A company's annual report is the package the directors must prepare for every financial year. The Companies Act calls it the "annual accounts and reports": the accounts themselves, a strategic report (unless the company is small), a directors' report (unless it is a micro-entity) and, unless the company is exempt, the auditor's report. Quoted companies add a directors' remuneration report. A private company must file at Companies House within nine months of its year end, and a public company within six months.
What goes into an annual report
Section 471 of the Companies Act 2006 sets out the components. For an unquoted company they are:
- Annual accounts. A balance sheet and a profit and loss account, with supporting notes, giving a true and fair view (section 396). A parent company preparing group accounts includes consolidated accounts too;
- Strategic report. Required unless the company is entitled to the small companies exemption (sections 414A and 414B);
- Directors' report. Required for every company except a micro-entity (section 415(1A));
- Auditor's report. Covering the accounts and, where relevant, the strategic and directors' reports, unless the company is exempt from audit.
A quoted company adds a directors' remuneration report (section 420), and the auditor reports on its auditable part. Companies with a UK listing in the commercial companies category must also say how they have applied the principles of the UK Corporate Governance Code and whether they have complied with its provisions, explaining any departures (UKLR 6.6.6R). The group accounts of a parent whose securities are traded on a UK regulated market must be prepared under UK-adopted international accounting standards (section 403). Other companies may use UK GAAP.
The strategic report
The strategic report exists to help members assess how the directors have performed their duty under section 172 to promote the success of the company. Under section 414C it must contain:
- A fair review of the business. A balanced and comprehensive analysis of the year's development and performance and the position at the year end, consistent with the size and complexity of the business;
- Principal risks and uncertainties. A description of the main risks facing the company;
- KPIs. Analysis using financial key performance indicators and, where appropriate, non-financial ones, including environmental and employee matters, to the extent needed to understand the business.
Large companies must add a section 172(1) statement describing how the directors had regard to stakeholders and long-term consequences. Medium-sized companies are exempt from this (section 414CZA). The largest companies also need a non-financial and sustainability information statement, which includes climate-related financial disclosures.
Size decides how much you prepare
A company's size category determines which reports it needs and whether it needs an audit. It qualifies for a category by meeting at least two of the three conditions. The figures below apply to financial years beginning on or after 6 April 2025; earlier years use the previous, lower thresholds:
| Category | Turnover | Balance sheet total | Average employees |
|---|---|---|---|
| Micro-entity | Not more than £1 million | Not more than £500,000 | Not more than 10 |
| Small | Not more than £15 million | Not more than £7.5 million | Not more than 50 |
| Medium-sized | Not more than £54 million | Not more than £27 million | Not more than 250 |
A company that qualifies as small is exempt from audit under section 477, subject to exclusions and to members' right to require one. Public companies and certain regulated businesses cannot be treated as medium-sized. After the first year, a change of size category only takes effect once the new position has applied for two consecutive years.
Worked example
A private trading company with a 30 April 2026 year end has turnover of £12 million, gross assets of £8 million and 60 employees, and was in the same position last year. It meets only one small-company condition (turnover), so it is not small. It meets all three medium-sized conditions, so it is medium-sized. Its annual report therefore needs audited accounts, a strategic report without a section 172(1) statement, and a directors' report. It must file at Companies House by 31 January 2027. It must also send copies to its members, debenture holders and anyone entitled to notice of general meetings by that date, or by the date it actually files if that is earlier (sections 423 and 424).
If its balance sheet total fell to £7 million, it would meet two of the three small-company conditions. It would still not become small until it had met them for two consecutive years. Once small, it would lose the strategic report and statutory audit requirements. Its filing could then be cut back to the balance sheet, with the profit and loss account and directors' report optional (section 444).
Deadlines and filing
- Private companies. Nine months after the end of the accounting reference period (section 442);
- Public companies. Six months after the period end. Copies go to members at least 21 days before the accounts meeting;
- First accounts. Where the first period is longer than twelve months, the deadline is nine months (private) or six months (public) from the first anniversary of incorporation, or three months after the period end if that is later;
- Shortened periods. If the year end has been brought forward, the deadline is the normal one or three months from the notice, whichever is later.
Late filing triggers an automatic civil penalty from Companies House. Failing to prepare the strategic report, directors' report or remuneration report is a criminal offence for each director who did not take all reasonable steps to comply.
What is changing
The government announced in October 2025 that it will legislate to remove the requirement to prepare a directors' report. Some content will be dropped and some, such as energy reporting and supplier payment disclosures, will move elsewhere in the annual report. The same package exempts medium-sized private companies, and wholly owned subsidiaries (other than public interest entities) covered by a UK parent's consolidated reporting, from the strategic report. The Modernising Corporate Reporting consultation, open until 30 November 2026, goes further. Its proposals include audit exemption for some medium-sized companies and a solvency-based regime to replace the distributable profits rules. Until legislation is made, the current requirements apply in full.
Primary sources: Companies Act 2006 s471, s414C, s382, s465 and s442, and the government's Modernising Corporate Reporting consultation. See also our guides to the directors' report, narrative reporting and filing company accounts.
Acumon prepares and audits annual reports for private and listed companies. Our statutory accounts and statutory audit teams can confirm your size category and deadlines and produce a report that meets the requirements without padding.