What is FRS 102?

FRS 102 is the financial reporting standard for SMEs in the UK and Ireland with a principal effective date of January 1, 2026.

The previous requirements for lessees outlined in Section 20 (Leases) of FRS 102 have now been updated to introduce a new accounting model. Under this model, the traditional classification of leases into operating and finance has been eliminated. As a result, most leases will be reflected on the balance sheet as a right-of-use asset accompanied by a corresponding lease liability. These amendments bring the standard into closer alignment with IFRS 16.