United Kingdom
| Extent of IFRS application | Status | Additional Information |
|---|---|---|
| IFRS Accounting Standards are required for domestic public companies | The application of UK-adopted international accounting standards is required in the consolidated financial statements of UK companies whose securities are admitted to trading on a UK regulated market. UK-adopted international accounting standards are IFRS Accounting Standards as issued by the IASB with some limited modifications. | |
| IFRS Accounting Standards are permitted but not required for domestic public companies | ||
| IFRS Accounting Standards are required or permitted for listings by foreign companies | Required for some and permitted for others. All foreign issuers whose securities are admitted to trading on a UK public market have the option to use IFRS Accounting Standards in their financial statements. | |
| The IFRS for SMEs Accounting Standard is required or permitted | The UK used the IFRS for SMEs Accounting Standard as a base for FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland but with significant modifications. | |
| The IFRS for SMEs Accounting Standard is under consideration |
Profile last updated: 10 May 2024
RELEVANT JURISDICTIONAL AUTHORITY
Department for Business and Trade
UK Endorsement Board
Financial Reporting Council
The Department for Business and Trade (DBT) is the lead UK government department for company law. It has responsibility for the Companies Act 2006 which sets out the reporting requirements for UK-registered companies, dependent on their size and legal status. The 2006 Act requires consolidated accounts (financial statements) of parent companies with securities admitted to trading in a UK-regulated market to be prepared in accordance with UK-adopted international accounting standards, and allows a company’s individual accounts and consolidated accounts of non-listed parent companies to be prepared in accordance with UK-adopted international accounting standards.
The Secretary of State for Business and Trade is empowered by law to adopt new or amended IFRS Accounting Standards for use within the UK as UK-adopted international accounting standards.
Following Parliamentary approval in 2021, the UK Endorsement Board (UKEB) is the body designated by the Secretary of State, in exercise of legal powers, to adopt new or amended IFRS Accounting Standards issued by the IASB for use within the UK. The UKEB is also responsible for influencing international debate on accounting standards and working with global standard-setters (including the IASB) to promote high-quality global standards.
The Financial Reporting Council (FRC) is empowered by law to set UK accounting standards (UK GAAP), for use by entities in the UK that do not apply UK-adopted international accounting standards.
The FRC has been delegated powers under the Companies Act 2006 to monitor the accounts of UK-registered companies and companies with transferable securities admitted to trading on a UK-regulated market. This includes monitoring accounts produced under both UK-adopted international accounting standards and UK GAAP.
Daniel Makevic: Daniel.Makevic@businessandtrade.gov.uk
Catherine Crowsley: UKEndorsementBoard@endorsement-board.uk
Jenny Carter: ukfrs@frc.org.uk
COMMITMENT TO GLOBAL FINANCIAL REPORTING STANDARDS
Yes.
Yes.
From 31 December 2020, UK companies are required to apply IFRS Accounting Standards in their consolidated financial statements (that is, companies with their securities admitted to trading on a UK-regulated market—see ‘Additional comments provided on the adoption status?’) and to state compliance with ‘UK-adopted international accounting standards’.1 UK-adopted international accounting standards refer to IFRS Accounting Standards, as adopted by the EU, that were incorporated into UK law with effect from 31 December 2020, by way of the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019, No 685 (IAS EU Exit Regulation), and subsequent adoptions of IFRS Accounting Standards undertaken by the Secretary of State and the UKEB.2
1 ‘International accounting standards’ means the ‘International Accounting Standards (IAS), International Financial Reporting Standards (IFRS Accounting Standards) and related Interpretations (SIC Interpretations and IFRIC Interpretations), subsequent amendments to those Standards and related interpretations, future standards and related interpretations issued or adopted by the International Accounting Standards Board.
2 For the International Accounting Standards and European Public Limited-Liability Company (Amendment etc.) (EU Exit) Regulations 2019, No 685 (IAS EU Exit Regulation), see http://www.legislation.gov.uk/uksi/2019/685/contents/made.
Until 31 January 2020, the UK was a member state of the EU and was subject to the IAS Regulation adopted by the European Union in 2002. See the EU profile for more detailed information about the EU IAS Regulation.
UK law permits optional application of UK-adopted international accounting standards for all companies (except those that are charities) whose securities do not trade on a UK-regulated market.
The UK-regulated markets for trading company securities are:
- IPSX;
- the London Stock Exchange;
- Aquis Stock Exchange Limited; and
- Cboe Europe Equities Regulated Market.
EXTENT OF IFRS APPLICATION
For DOMESTIC companies whose debt or equity securities trade in a public market in the jurisdiction:
UK law and the Financial Conduct Authority’s Disclosure Guidance and Transparency Rules require the application of UK-adopted international accounting standards in the consolidated financial statements of UK companies whose securities are admitted to trading on a UK-regulated market.
For accounting periods that began before the end of the transition period (31 January 2020), the Disclosure Guidance and Transparency Rules required that for UK companies producing consolidated financial statements, financial statements were required to be produced using EU-endorsed IFRS Accounting Standards. For further information, see: https://www.handbook.fca.org.uk/handbook/DTR/4/?view=chapter.
UK-adopted international accounting standards are IFRS Accounting Standards, as issued by the IASB, with some limited modifications, described in subsequent entries to this Profile.
The requirement to use UK-adopted international accounting standards applies to the consolidated financial statements of all UK companies whose debt or equity securities are admitted to trading on a UK-regulated market.
In addition, AIM-listed companies that have subsidiaries and are incorporated in the UK, the Isle of Man or the Channel Islands must apply UK-adopted international accounting standards. AIM-listed companies from any EEA Member State must apply EU-adopted IFRS Accounting Standards.
For FOREIGN companies whose debt or equity securities trade in a public market in the jurisdiction:
Required for some and permitted for others.
On 31 December 2020, the transition period following the UK’s exit from the EU ended. At that date, standards deemed equivalent to IFRS Accounting Standards, as adopted by the EU, were granted equivalence to UK-adopted international accounting standards in UK law. This means that third-country issuers can also use specified standards deemed equivalent to UK-adopted international accounting standards to satisfy transparency requirements when they have, or seek admission to have, securities admitted to trading on a UK-regulated market.
IFRS Accounting Standards, as adopted by the EU, are recognised as equivalent to UK-adopted international accounting standards for third-country issuers that have, or seek admission to have, their securities admitted to trading on a UK-regulated market. Future equivalence decisions can be made by the UK assessing whether other accounting standards are equivalent to those adopted by the UK.
This provision is enabled by virtue of the retained UK versions of European Commission Regulation 1569/2007 and European Commission Decision 2008/961/EC, as amended by the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019.3
In accordance with these provisions, the standards in this list are considered as equivalent to UK-adopted international accounting standards:
- IFRS Accounting Standards, as issued by the IASB, provided that the notes to the audited financial statements contain an explicit and unreserved statement that those financial statements comply with IFRS Accounting Standards;
- IFRS Standards as adopted by the EU;
- generally accepted accounting principles of Japan;
- generally accepted accounting principles of the United States of America;
- generally accepted accounting principles of the People’s Republic of China;
- generally accepted accounting principles of Canada; and
- generally accepted accounting principles of the Republic of Korea.
3 See European Commission Regulation 1569/2007 at http://www.legislation.gov.uk/eur/2007/1569/2020-01-31#. See European Commission Decision 2008/961/EC at http://www.legislation.gov.uk/eudn/2008/961/2020-01-31. See regulations 67–68 of the Official Listing of Securities, Prospectus and Transparency (Amendment etc.) (EU Exit) Regulations 2019 at https://www.legislation.gov.uk/uksi/2019/707/contents/made.
IFRS ENDORSEMENT
UK law permits optional application of UK-adopted international accounting standards for all companies (except those that are charities) whose securities do not trade in a regulated market.
UK-adopted international accounting standards are IFRS Accounting Standards as issued by the IASB with some limited modifications.
The Standards and their limited modifications are described in section ‘Has the jurisdiction eliminated any accounting policy options permitted by IFRS Accounting Standards and/or made any modifications to any IFRS Accounting Standards?’. These modifications do not preclude companies who do not apply the modifications from asserting compliance with both UK-adopted international accounting standards and IFRS Accounting Standards as issued by the IASB.
UK-adopted international accounting standards, for financial years beginning after 31 December 2020.
Yes. It is possible for an entity to assert compliance with UK-adopted international accounting standards and, additionally, to assert compliance with IFRS Accounting Standards, provided compliance with UK-adopted international accounting standards would also result in compliance with IFRS Accounting Standards as issued by the IASB.
On 31 December 2020, the transition period following the UK’s exit from the EU ended. IFRS Accounting Standards as adopted by the EU were incorporated into UK law, with effect from that date, by way of the IAS EU Exit Regulation.4 Powers under UK law to formally adopt IFRS Accounting Standards were reserved to the UK Government. These powers were delegated to the UK Endorsement Board in May 2021 through the International Accounting Standards (Delegation of Functions) (EU Exit) Regulations 2021.
New and amended IFRS Accounting Standards subject to endorsement and adoption by the UKEB. Endorsement and adoption include public consultation, assessment against legislative adoption criteria and the publication of final decisions. Information on new and amended Standards and Interpretations adopted into UK law can be found here:https://www.endorsement-board.uk/uk-adopted-international-accounting-standards.
4 For the IAS EU Exit Regulation, see http://www.legislation.gov.uk/uksi/2019/685/contents/made.
On 31 December 2020, the transition period following the UK’s exit from the EU ended. At that date IFRS Accounting Standards, as adopted by the EU, were incorporated into UK law, including the following modifications or exclusions:
- a ‘carve-out’ relating to fair value hedge accounting for portfolio hedges of interest rate risk in IAS 39 Financial Instruments: Recognition and Measurement.
- IFRS 14 Regulatory Deferral Accounts (issued by the IASB on 30 January 2014) has not been adopted.
TRANSLATION OF IFRS ACCOUNTING STANDARDS
APPLICATION OF THE IFRS FOR SMEs ACCOUNTING STANDARD
The UK used the IFRS for SMEs Accounting Standard as a base for FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland, but with significant modifications.
The financial reporting standards under UK and Irish GAAP, as issued by the Financial Reporting Council are:
FRS 101 Reduced Disclosure Framework (Framework). This Framework generally requires the application of IFRS Accounting Standards, as adopted by the UK, with reduced disclosures. The Framework is intended for the individual company financial statements of qualifying entities within a corporate group that has applied IFRS Accounting Standards in its consolidated financial statements.
FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland. FRS 102 is the main standard applicable in the UK and Republic of Ireland and is based on the IFRS for SMEs Accounting Standard, but with significant modifications. FRS 102 permits reduced disclosures for the individual company financial statements of qualifying entities within a group. The standard also contains separate, more limited, disclosure requirements for small entities.
FRS 103 Insurance Contracts. This standard sets out the accounting and reporting requirements for insurance contracts issued and reinsurance contracts held. FRS 103 applies to entities applying FRS 102 and is based on IFRS 4 Insurance Contracts and the previous UK standard on life assurance.
FRS 104 Interim Financial Reporting. FRS 104 is intended for use in preparing interim financial reports by (a) entities that apply FRS 102 and (b) entities that apply FRS 101. FRS 104 is based on IAS 34 Interim Financial Reporting, with modifications.
FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime. Micro-entities are defined in the UK Companies Act 2006. FRS 105 supplements the legal reporting requirements for micro-entities and is simpler to apply than FRS 102.
The Financial Reporting Council also issues FRS 100 Application of Financial Reporting Requirements. FRS 100 sets out the overall framework for financial reporting in the UK and Ireland, explaining transition arrangements and:
- which standards apply to which types of entity;
- when an entity can apply the reduced disclosure framework; and
- when an entity should follow a statement of recommended practice.
In issuing FRS 102, modifications to the IFRS for SMEs Accounting Standard have been made. Significant differences between FRS 102 and the IFRS for SMEs Accounting Standard are listed on the FRC website.
