The directors' report lost roughly half its content on 6 April 2025. Financial instruments, post-balance-sheet events, likely future developments, research and development, overseas branches, disabled employees and employee engagement were all repealed. Most checklists still list them. And micro-entities do not have to prepare one at all.
Who has to prepare one
Section 415 of the Companies Act 2006 requires the directors to prepare a directors' report for each financial year. Failure is an offence by every director who did not take all reasonable steps, punishable by a fine.
Two exemptions matter. Micro-entities are exempt from preparing one at all — section 415(1A) disapplies the duty entirely, which has been the position since April 2015 and is still widely missed. And small companies get the small companies exemption under section 415A, available also to a company that would qualify but for being a member of an ineligible group. That exemption reduces the content rather than removing the report.
What it must contain now
From the Act itself: the names of everyone who was a director at any time during the year, and — except for a company entitled to the small companies exemption — the amount the directors recommend be paid by way of dividend.
From the regulations, for large and medium-sized companies, what survives is:
- Political donations exceeding £2,000 in aggregate, naming recipients and amounts, plus non-UK political contributions;
- Acquisition of own shares, for public companies;
- Capital structure disclosures for publicly traded companies — transfer restrictions, significant holdings, voting rights, employee schemes, special control rights and takeover-related agreements;
- Streamlined energy and carbon reporting, for quoted and for large unquoted companies;
- A corporate governance statement, for very large private companies;
- Supplier payment practices and performance.
For small companies the residue is short: the section 416 information, political donations above £2,000, and non-UK political parties.
There is also a useful flexibility that is under-used: required information may instead be given in the strategic report, with a cross-notification in the directors' report.
What was removed, and when
The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 — SI 2024/1303 — came into force on 6 April 2025 and apply to financial years beginning on or after that date. There is no early adoption option.
Removed from the large and medium-sized requirements:
- Financial instruments;
- The paragraph 7 cluster — important events since the year end, likely future developments, research and development activities, and the existence of overseas branches;
- Employment of disabled persons;
- Employee, supplier and customer engagement.
And for small companies, the employment of disabled persons requirement went too.
That paragraph 7 cluster is the one worth dwelling on, because it is the content most people think of as the directors' report: post-balance-sheet events, future developments, R&D and branches. All four are gone for periods beginning on or after 6 April 2025. Earlier casualties, from 2013, were asset values, charitable donations and the creditor payment policy.
A template that still produces those paragraphs is not merely verbose — it is reporting against a repealed requirement, which invites the question of what else in the pack is out of date.
The strategic report is a separate document
Section 414A requires a strategic report for each financial year, and it does not apply to a company entitled to the small companies exemption. Its purpose is to inform members and help them assess how the directors performed their section 172 duty.
Content: a fair review of the business, a description of the principal risks and uncertainties, and a balanced and comprehensive analysis using financial key performance indicators — with medium-sized companies permitted to omit the non-financial KPIs. Quoted companies add main trends and factors likely to affect future development, environmental matters, employees, social, community and human rights issues, strategy and business model, and the gender breakdown of directors, senior managers and employees.
Note where "likely future developments" now lives: it left the directors' report in 2025 but remains a quoted-company strategic report item. The content did not disappear from annual reporting; it moved.
The strategic report must be approved by the board and signed by a director or the secretary.
The auditor statement
Section 418 requires a statement that, so far as each director is aware, there is no relevant audit information of which the auditor is unaware, and that the director has taken the necessary steps to identify such information and ensure the auditor knows of it. Directors discharge the duty by making such enquiries of fellow directors and the auditors as are reasonably necessary.
It does not apply where the company is exempt from audit and takes that exemption. Where it does apply, a director who knew the statement was false, or was reckless, and failed to prevent approval commits an offence carrying up to two years' imprisonment on indictment. It is the one part of the directors' report with a custodial sanction attached, and it is routinely signed without enquiry.
SECR, and a threshold trap
The energy and carbon content applies where a company does not satisfy two or more of: turnover not more than £36 million, balance sheet total not more than £18 million, and not more than 250 employees. There is a low-use exemption where consumption is 40,000 kWh or less.
Here is the trap. SI 2024/1303 raised the medium-sized company thresholds to £54 million turnover and £27 million balance sheet — but it did not touch the SECR figures, which are hard-coded at £36 million and £18 million. So a company that became "medium-sized" for accounts purposes in 2025 may still be inside SECR. Our guide to ESG reporting requirements covers the content in detail.
Is it being abolished?
Announced, not enacted. In September 2026 the government said plans are underway to scrap directors' reports and expand strategic report exemptions, with a consultation running to 30 November 2026 and claimed savings of around £230 million a year from this element. No implementation date, no draft instrument.
There is a genuine tension worth knowing about rather than resolving. The prospective ECCTA version of section 444 — substituted in 2023 but not yet commenced — would require small companies to deliver a directors' report to the registrar. So one workstream would make small companies file a report while another proposes abolishing it. Until commencement dates appear, both are pending.
Acumon prepares statutory accounts and the narrative reporting around them through statutory accounts and financial reporting work, with corporate governance support alongside — see also our guide to narrative reporting. If your directors' report template still covers post-balance-sheet events and R&D, it is reporting against requirements that were repealed in April 2025.