Newswire November 2025

At Mercia, we watched the Autumn Budget with great interest, despite the OBR blunder that led to the details being widely leaked before the Chancellor had a chance to address Parliament.

It was another momentous Budget occasion as Rachel Reeves announced up to £26 billion in tax increases, alongside billions in extra public spending. The Chancellor managed to achieve this while increasing her fiscal headroom to £22 billion.

To help you communicate the key changes from the recent Autumn Budget, Mercia has created an easy-to-understand Budget Summary. This resource enables you to demonstrate your expertise and is still available to order.

In this month’s newswire, we look at HMRC’s guidance on outsourced labour fraud and the tax authority’s new manual - see the tax section for details. On the audit side, the FRC has issued its key findings and good practice report, as well as the changes to the charity law thresholds following a consultation.

AUDIT & ACCOUNTING

Financial Reporting Council (FRC) publishes key findings and good practice report

The Regulator has published its latest audit inspection report, covering the 2023/24 and 2024/25 cycles. Tier 1 firms achieved over 90% of audits rated good or requiring only limited improvements, while Tier 2 and 3 firms lagged significantly, with 31% of audits needing major remediation. Common weaknesses included insufficient challenge on impairment reviews, poor documentation, and ethical breaches. The report also highlights examples of good practice, aiming to help firms strengthen methodologies and improve audit quality across the profession.

FRC publishes corporate reporting insights

The FRC has published two thematic reviews to enhance UK corporate reporting. The first focuses on share-based payment arrangements under IFRS 2, highlighting inconsistencies such as unexplained cash outflows for equity-settled awards and urging clearer disclosures and robust explanations of valuation assumptions. The second examines investment companies, noting recurring issues with Level 3 fair value measurements and recommending improved transparency around unobservable inputs and sensitivities. These reviews aim to promote clarity, consistency, and investor confidence, reinforcing the FRC’s commitment to high-quality reporting standards across UK businesses.

Chancellor unveils major reporting overhaul to cut costs

The Chancellor has unveiled plans to simplify corporate reporting for more than 100,000 UK businesses, aiming to cut red tape and deliver an estimated £6 billion in annual savings. Under the proposals, thresholds for small companies will rise by around 50%, while micro-entity turnover limits will increase to £1 million. These changes are designed to reduce administrative burdens, streamline compliance requirements, and free up resources for investment and growth. By modernising reporting rules, the government hopes to make regulation more proportionate, support entrepreneurial activity, and strengthen the UK’s position as a competitive environment for business.

The International Accounting Standards Board (IASB) issues amendments for translating financial information into hyperinflationary currencies

The IASB has published amendments to IAS 21 to clarify translation requirements for hyperinflationary currencies. Effective from 2027, the changes require use of closing rates for all amounts, including comparatives, to improve comparability and reduce diversity in practice. This will impact international audit markets – it remains to be seen whether similar updates will be adopted by UK standards setting bodies.

CHARITIES

Statement of Recommended Practice (SORP) consultation concludes

The Charities SORP Committee has closed its consultation on the Exposure Draft SORP 2026, which ran from March to June 2025 and issued its final version of the amended SORP. The updated SORP introduces major changes aligned with FRS 102, including a five-step revenue recognition model and requirements for most operating leases to appear on the balance sheet. Additional revisions cover trustees’ annual reports, fund accounting, and disclosure of trustee remuneration. The amended SORP applies to accounting periods starting on or after 1 January 2026, early adoption is permitted.

Consultation on financial thresholds in charity law: government response

The government has confirmed changes to charity law thresholds following its consultation. Audit thresholds in respect of income will rise from £1m to £1.5m, and the asset thresholds from £3.26m to £5m, reducing regulatory burdens for thousands of charities. Independent examination income thresholds will also increase from £25k to £40k, benefiting smaller organisations. These changes are expected to save the sector an estimated £47m annually while maintaining transparency and accountability.

REGISTERED SOCIAL HOUSING PROVIDERS

Consultation opens on amendments to the Housing SORP

The Housing SORP Working Party is consulting on revisions to the Housing SORP to reflect updates to FRS 102 and address emerging accounting issues. Proposals include adopting the five-step revenue recognition model and changes to lease accounting, requiring recognition of right-of-use assets. The consultation also considers lowering the threshold for strategic reports from 5,000 homes to 1,000 homes to improve transparency. The deadline for contributions to the consultation is 12 January 2026.

PENSIONS

Government approves collective pensions, promising higher retirement incomes

New regulations will expand Collective Defined Contribution (CDC) pension schemes to multi-employer arrangements, offering workers more secure lifetime incomes. Research suggests CDCs could boost retirement incomes by up to 60% compared to traditional Defined Contribution schemes. A number of large CDC plans already exist (for example, Royal Mail’s plan already covers 100,000 members). It is hoped that pooling funds will enable larger investments in UK infrastructure and businesses. Accountants and auditors working in the sector will need to monitor developments closely and potentially familiarise themselves with reporting requirements for these schemes as they become more widespread.

HIGHER & FURTHER EDUCATION

Statement of recommended practice: accounting for further and higher education 2026 edition

The 2026 edition of the Further and Higher Education SORP has been published, setting out best practice for financial reporting across UK institutions. Key changes include lease accounting under the right-of-use model and a new revenue recognition framework. The SORP applies to accounting periods beginning on or after 1 January 2026 and aims to enhance transparency and comparability across the sector.

LIMITED LIABILITY PARTNERSHIPS (LLPs)

Consultative Committee of Accountancy Bodies (CCAB) issues revised SORP for the sector, effective 2026

The CCAB has released the updated Statement of Recommended Practice (SORP) for Limited Liability Partnerships, effective for periods starting on or after 1 January 2026 (early adoption allowed).

Key changes include:

• Mandatory disclosures for small LLPs – now required to ensure a true and fair view, following removal of EU restrictions.
• Clarified guidance on members’ remuneration – parent LLPs must only include amounts payable to their own members in consolidated accounts.
• Updates on post-retirement payments – improved clarity without changing underlying requirements.
• Alignment with FRS 102 terminology and recent UK regulatory changes.

This update reflects feedback from the 2024 consultation and changes in UK reporting regulations.

ANTI-MONEY LAUNDERING (AML)

Reforming anti-money laundering and counter-terrorism financing supervision

The government will consolidate AML and counter-terrorist financing supervision under the Financial Conduct Authority (FCA), following its 2023 consultation. The reform aims to strengthen oversight, reduce fragmentation, and improve consistency across legal, accountancy, and trust service providers following criticism from a Financial Action Task Force (FATF) review which highlighted weaknesses in the UK’s supervisory regime, particularly in the professional services sector.

The government also hopes to increase simplicity and efficiency under the new supervisory regime, making the system easier to navigate for firms and law enforcement agencies, as well as leveraging the FCA’s track record as a well-resourced regulator with robust enforcement powers.

Institute of Chartered Accountants of England and Wales (ICAEW) releases 2025 AML Thematic Review on Suspicious Activity Reports (SARs)

The regulator last focused on SARs in 2020. Whilst the respondents to their previous report principally comprised larger firms (turnover >£2m), making direct comparison difficult, the report noted a number of positive trends suggesting that smaller firms are every bit as engaged with AML processes and awareness as their larger counterparts, in particular noting that 90% of the firms sampled in 2025 stated that their nominated officers had received training on submission of SARs as opposed to 40% in the 2020 sample. For further information, the report can be found here.

ICAEW 2026 AML Supervision Report released

In addition to its latest thematic, the ICAEW has also released its 2025 AML Supervision Report. On an annual basis, the regulator summarises the results of its programme of supervisory and enforcement work. The report notes that results of Quality Assurance work were broadly consistent with the prior period, with around 80% being assessed to be compliant. For further details, the report cannot be found here.

SUSTAINABILITY

FRC takes steps to support quality and consistency in the assurance of sustainability reporting

The Financial Reporting Council (FRC) has issued the International Standard on Sustainability Assurance (UK) 5000 – General Requirements for Sustainability Assurance Engagements (ISSA (UK) 5000), a UK version of the new sustainability assurance standard for voluntary use which is designed to align with international benchmark assurance standards and aims to strengthen confidence in non-financial reporting. Applicable to both limited and reasonable assurance engagements, ISSA (UK) 5000 sets out clear principles for assurance providers in assessing sustainability information, aiming to improve consistency, transparency, and comparability across the market. By introducing this framework, the FRC seeks to support high-quality assurance practices, enhance investor trust in sustainability disclosures, and help UK businesses meet growing expectations for credible environmental, social, and governance (ESG) reporting.

TAX

Check for signs of outsourced labour payroll fraud

HMRC has updated it’s guidance on what checks businesses should complete if you’re an agency, employer or worker and how to report potential fraud. To read more, please click here.

Check genuine HMRC contact that uses more than one communication method

HMRC has updated its guidance on spotting scams and suspicious emails, phone calls, texts and letters. To read more, please click here.

New HMRC manual

This manual aims to provide an accessible and easy to understand guide to trade-based money laundering. To read more, please click here.