Are you sure your business is actually in scope for FRS 102 Section 20?

The revised lease accounting rules took effect for periods beginning on or after 1 January 2026, and many UK and Irish SMEs are now part-way through their first audit cycle under them. Before assuming you are in scope, or out of it, check the perimeter.

1. The micro-entity route. A company that qualifies as a micro-entity may report under FRS 105, and the new on-balance-sheet lease rules do not apply there.

• UK (periods from 6 April 2025): two of three of turnover not more than £1m, balance sheet total not more than £500,000, no more than 10 employees.
• Ireland (from July 2024): turnover not more than €900,000, balance sheet total not more than €450,000, no more than 10 employees.

2. Already on IFRS or FRS 101. If the statutory accounts are prepared under FRS 101 or full IFRS, IFRS 16 already applies and Section 20 does not bite.

One caveat matters here. Filing under FRS 102 while feeding IFRS 16 figures up to a parent for consolidation does not exempt the subsidiary: its own statutory accounts still need the FRS 102 treatment.

3. Everyone else. Small and medium companies are fully in scope. Section 1A reduces what a small company discloses; it does not remove the requirement to measure the leases and put them on the balance sheet. Reduced disclosure is not an exemption.

Many finance teams discover the gap only in their first post-transition audit.