Why Businesses Must Act Now to Prepare for the Lease Accounting Overhaul to FRS 102

2025 marks a major shift in financial reporting for UK and Irish businesses with the introduction of the Financial Reporting Exposure Draft (FRED) 82 amendments to FRS 102. These changes, aligning with IFRS 16, will significantly impact lease accounting and revenue recognition. While accountants are gearing up for compliance, the reality is that these amendments will create ripples across entire organizations, affecting operations, IT, HR, and procurement teams. 

It is why we have created the ‘Five ways FRS 102 changes will impact your business’ whitepaper to help businesses understand the full scope of these changes, their implications, and how to prepare for a seamless transition.

What is FRED 82 and What Are the Key Changes to FRS 102?

FRED 82 is a Financial Reporting Exposure Draft issued by the Financial Reporting Council (FRC) to align UK Generally Accepted Accounting Practice (UK GAAP) with international standards. The changes, effective for reporting periods beginning on January 1, 2026, introduce several key updates: 

• Recognition of Lease Liabilities: Lessees will need to recognize most leases on the balance sheet, recording a right-of-use asset and a corresponding lease liability. 
• Revenue Recognition Model: A five-step model derived from IFRS 15 will redefine how businesses record revenue from contracts with customers. 
• Impact on Financial Metrics: By bringing leases onto balance sheets, financial indicators like EBITDA, gearing ratios, and asset turnover will be affected. 
• Simplifications for Small to Medium Enterprises (SME): While larger companies will need extensive updates, SMEs will see some streamlined requirements.

Do Not Leave It Too Late

With the FRED 82 deadline approaching, businesses must start preparing now. A last-minute rush could lead to compliance risks, operational disruptions and resource strains. Taking early action ensures that your organization is well-positioned to adapt smoothly and efficiently. 

Download our whitepaper on 'Five ways FRS 102 changes will impact your business' to explore in-depth strategies and practical steps to get ahead.