FRS 101 in the age of IFRS 18: Key implications for UK Group reporting

In May 2025, the Financial Reporting Council (FRC) concluded its 2024/25 annual review of FRS 101, issuing substantive amendments that directly address the interaction between FRS 101 and the incoming IFRS 18 ‘Presentation and Disclosure in Financial Statements’. These amendments provide important reliefs for FRS 101 reporters — but they also introduce new clarity on scope that practitioners need to understand.

This article sets out the key implications for FRS 101 reporters in the UK.

What is FRS 101 and who does it apply to?

FRS 101 sets out a reduced disclosure framework for the individual financial statements of subsidiaries and ultimate parents that otherwise apply the recognition, measurement and disclosure requirements of UK-adopted IFRS. It is an optional framework, designed to enable cost-effective financial reporting within groups — particularly those applying IFRS accounting standards in their consolidated financial statements.

Because FRS 101 is based on applying adopted IFRS accounting standards, changes at the IFRS level have direct implications for entities using the reduced disclosure framework.

IFRS 18: What is it and when does it apply?

IFRS 18 ‘Presentation and Disclosure in Financial Statements’ was issued by the IASB in April 2024 and replaces IAS 1. It was formally endorsed for UK use by the UK Endorsement Board (UKEB) on 10 December 2025.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. Importantly, because IFRS 18 requires retrospective application, calendar year-end companies will need to restate 2026 comparatives when they first apply it.

The headline changes introduced by IFRS 18 include:

• Two new mandatory subtotals in the statement of profit or loss: Operating Profit and Profit before Financing and Income Taxes

• Classification of income and expenses into five defined categories

• Mandatory disclosure requirements for Management-defined Performance Measures (MPMs) used in public communications outside the financial statements

If you would like to explore the changes in more detail, please read our blog: Preparing for IFRS 18: What Finance teams need to do before 2027.

How do the May 2025 FRS 101 amendments change the picture?

The FRC’s 2024/25 cycle amendments to FRS 101, issued on 28 May 2025, are significant. Rather than simply carrying forward existing exemptions, the FRC has introduced new reliefs specifically in response to IFRS 18 — and has also clarified an important scope restriction.

Key changes include:

• Exemption from MPM disclosures. FRS 101 reporters are fully exempt from the IFRS 18 requirements (paragraphs 121–125) relating to management-defined performance measures. This means qualifying entities do not need to consider whether they have MPMs, nor disclose information about them. This is a material relief for many groups.

• Exemption from certain expense disaggregation requirements. Qualifying entities are also exempt from the IFRS 18 requirement (paragraph 83(b)) to provide detailed quantitative analysis about the nature of expenses classified by function in the statement of profit and loss.

• FRS 101 and IFRS 19 cannot be applied together. The FRC has confirmed that qualifying entities applying FRS 101 may not also apply IFRS 19 ‘Subsidiaries without Public Accountability: Disclosures’. This has been written into FRS 101 to avoid any ambiguity, given that the two standards pursue similar objectives through different approaches.

For most extant FRS 101 exemptions, the FRC has maintained them where they applied to requirements in IAS 1 that have been retained in or moved into IFRS 18, ensuring continuity for preparers.

How disruptive will IFRS 18 actually be for FRS 101 reporters?

The degree of disruption will vary depending on how an entity presents its financial statements.

Entities using Companies Act formats are expected to be less significantly affected. The FRC has noted that entities continuing to present primary financial statements in Companies Act formats will experience fewer changes than those applying adapted formats.

Entities using adapted IFRS-style formats are more likely to need to review their statement of profit or loss structure, particularly around the classification of income and expenses and the presentation of the new mandatory subtotals.

In either case, the combination of the new mandatory subtotals and the transition to IFRS 18 means that finance teams should review their current presentation sooner rather than later — not least because retrospective restatement will be required.

Three questions Finance teams should be asking now

1. Will our financial statement format need to change?

Many organisations have used the same financial statement formats for years. Depending on whether you currently use Companies Act or adapted IFRS-style formats, the impact of IFRS 18 will differ. Now is the time to map your current presentation against the IFRS 18 requirements and identify any gaps, particularly around Operating Profit and the income/expense classification categories.

2. Do we use performance measures that could be affected?

Under full IFRS 18, adjusted profit measures and similar alternative performance indicators used in public communications would need to be brought within the financial statements and reconciled to IFRS-defined subtotals. For FRS 101 reporters, the May 2025 amendments provide a specific exemption from these MPM requirements, which is a significant relief. However, it remains good practice to review your performance metrics and consider whether any changes to external communications are appropriate.

3. Do our systems and processes support the transition?

For many finance teams, the greatest challenge will not be understanding the standard itself — it will be implementing the changes efficiently, particularly for groups with multiple subsidiaries or jurisdictions where maintaining consistency is complex. Systems need to be capable of capturing the information required under IFRS 18 and producing restated comparatives for 2026.

Technology and standardisation

As reporting requirements evolve, many organisations are using this period of change as an opportunity to review their wider financial reporting processes. Cloud-based financial reporting solutions can help improve consistency, reduce manual effort and make it easier to respond to regulatory change.

For multinational groups reporting across different jurisdictions, maintaining a consistent approach is especially important as IFRS 18 takes effect globally.

Supporting FRS 101 reporting

For firms and organisations preparing financial statements under FRS 101, having the right tools in place can make compliance significantly easier. The FRS 101 template is now available in the UK through Caseware Financials, helping organisations prepare compliant financial statements efficiently and consistently.

To learn more about the templates available today and upcoming developments, watch our on-demand webinar, UK & ROI Financial Statement Templates: What’s Available Today and What’s Coming Next, or get in touch with our team.

Conclusion

The regulatory landscape for FRS 101 reporters is more active than it may appear. The FRC’s May 2025 amendments provide meaningful relief from some of IFRS 18’s most burdensome requirements, including the MPM disclosures — but IFRS 18 will still affect how FRS 101 entities present their financial statements, particularly from 1 January 2027.

The organisations that start preparing now — reviewing their formats, assessing their systems and understanding the amended FRS 101 exemptions — will be best placed to manage the transition smoothly.

For FRS 101 reporters, the key is not simply understanding the standard — it is ensuring that reporting processes, systems and teams are ready for what comes next.

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