The Department for Business and Trade has launched a call for evidence ‘Smarter regulation non-financial reporting review’ which explores the costs and benefits of producing non-financial information and whether the company size thresholds remain appropriate.

Building on the government's ‘Smarter regulation to grow the economy’ policy paper, this call for evidence focuses on the non-financial information requirements contained in Part 15 of the Companies Act 2006 and the equivalent requirements for Limited Liability Partnerships.

The views of companies, accounting firms, financial market participants and other stakeholders are invited on the:

  • Costs and benefits of producing non-financial information.
  • The value of the information produced.
  • How the non-financial reporting regime might be improved in future.

Core non-financial reporting information contained in the annual report includes the directors’ report and strategic report.

Such non-financial information allows a company to:

  • Explain the information in its financial statements to provide a greater understanding of its financial performance.
  • Describe broader information relating to the business that allows stakeholders to understand how a wide range of factors may affect the company’s performance.
    • This might extend to wider societal issues such as narrowing the gender pay gap and steps taken to tackle modern slavery. It provides insight into a company's culture and values along with how it interacts with the environment.

The call for evidence also seeks views on the Company size thresholds that are set out in the Companies Act for micro, small, medium and large entities.

  • This follows a commitment made by the government in May 2022 to update the definition of micro-entities.

Responses to the call for evidence can be made online until 11:45 pm on 16 August 2023.

Call for evidence questions

  • What type of respondent are you?
  • What is your/your organisation's name?
  • What is your email address?
  • How did you hear about this consultation?
  • Are you a preparer or a user of non-financial information?
  • How valuable, if at all, is the preparation and/or disclosure of non-financial information for the effective running of your company? Why do you say that?
  • What challenges, or costs, if any, does the preparation, disclosure and distribution of non-financial information create for your company?
  • What, if any, are the key drivers of cost when having to comply with non-financial reporting requirements? 
  • Please select the most applicable statement:
    • The benefits of preparing and disclosing non-financial reporting information outweigh the costs.
    • The costs of preparing and disclosing non-financial reporting information outweigh the benefits.
    • The benefits of preparing and disclosing non-financial reporting information are proportionate to the costs.
  • To what extent do the Companies Act non-financial reporting requirements align with other regulatory requirements your company might be in scope of?
  • To what extent do you agree or disagree that non-financial information prepared by companies is useful?
  • How, if at all, do you use non-financial information?
  • Which types of non-financial information are the most useful and/or which are the least useful?
  • How easy or difficult is it to interpret non-financial reporting disclosures?
  • How does non-financial information support your judgement in the following areas? 
    • How the directors of the company have fulfilled their duties.
    • The performance of the company.
    • The company's future strategy, opportunities and risk.
    • The company’s approach to societal issues such as modern slavery and the gender pay gap.
    • Whether or not to invest in a company. Please consider the types of non-financial information that is most and least useful, and how it compares to other factors or information in your response.
  • What changes, if any, would you like the UK Government to make to the current legal requirements for companies to prepare non-financial information, and why? 
  • Thinking about the future of your organisation and the UK’s transition to a net zero economy, what changes, if any, do you think may be required to the type of non-financial information produced to guide decision-making, and why?
  • How should the standards being prepared by the International Sustainability Standards Board (ISSB) be incorporated into the UK’s non-financial reporting framework?
  • To what extent do you agree or disagree that current size and company-type thresholds for non-financial reporting information could benefit from simplification? 
  • The Companies Act 2006 sets out size categories for UK companies that determine the type of accounts that need to be prepared and filed with Companies House. Do these size thresholds remain appropriate?
  • Do you have any other comments that might aid the consultation process as a whole?

Useful guides on this topic

What is a small or medium-sized company?
What is an SME? What size is a small company under the Companies Act? What size is a micro company? What is a small company under EU law?

Audit thresholds
What are the audit thresholds? Which entities are exempt from audit?

Companies House: What's New 2022?
Small & micro companies will have to file full profit and loss and balance sheets as part of reforms introduced in the Government's 'Corporate Transparency & Register Reform White Paper'. Further reforms give new powers to the Registrar including identity checks for directors and restrictions on corporate directorships.

External link

Department for Business and Trade: Smarter regulation non-financial reporting review: call for evidence


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