There is a conversation I am going to have in January, probably more than once. A director owns the unit his company trades from, rents it to the company at a sensible commercial figure, and has always treated that as his own business. His accounts run to four pages. He has never thought of them as a document anyone reads, let alone one anyone can download for nothing.
For his 31 December 2026 year end, that rent goes in a note. So does the dividend he took. Both will sit on the public register at Companies House, free to anyone who looks.
TL;DR: For periods beginning on or after 1 January 2026, small companies lose the exemption that let them omit related party transactions on normal commercial terms. The arm's-length rent, the management charge and the dividend all go in the notes. The director's salary, oddly, still does not have to.
What actually changed in Section 1A?
The carve-out that made this easy has gone. Under the old paragraph 1AC.35, a small entity only had to disclose material related party transactions that had not been concluded under normal market conditions. In owner-managed practice that covered almost everything, because these arrangements are usually priced sensibly. If it was arm's length, it stayed out.
The Periodic Review 2024 amendments to FRS 102, issued by the FRC in March 2024, remove that limb for accounting periods beginning on or after 1 January 2026, and widen the definition of a related party (ICAEW, 2026). Small entities now apply paragraph 33.9 of full FRS 102: the nature of the relationship, the amounts, outstanding balances and their terms, guarantees, and any provision for doubtful debts. Paragraph 33.14 lets you aggregate items of a similar nature. Materiality still applies, and transactions between group members remain exempt under 33.1A provided every subsidiary involved is wholly owned. The going concern limb of the same review I covered separately in what small companies must now disclose about going concern.
The director's loan was already public
This is the bit I keep correcting, and I had it wrong myself at first. Most of the commentary I have read treats the director's loan account as the headline exposure. It is not new, and it was never private.
Section 413 of the Companies Act 2006 already requires the notes to disclose advances and credits granted to directors: the amount, an indication of the interest rate, the main conditions, and any amounts repaid, written off or waived (Companies Act 2006 s413). Small companies have never been exempt from it. If your client has an overdrawn loan account, that figure has been going to Companies House for the last decade already.
What is genuinely new is the transaction that was priced properly. The rent on the trading unit, the management charge from the holding company, the recharge to the other company the client owns. Those are the ones the old carve-out let you leave out.
Why does the salary stay out when the rent goes in?
Because key management personnel compensation sits in a paragraph small entities were never asked to apply. Paragraph 33.7 of FRS 102, which requires disclosure of total compensation paid to key management personnel, is not imposed on a small entity applying Section 1A. The FRC confirmed this in September 2025 after the amendments caused a scare about directors' remuneration becoming public (ICAEW, 2025).
So there is still no explicit requirement in FRS 102 for a small company to publish what it pays its directors. But a transaction with a director that falls outside the definition of compensation lands squarely in 33.9. Rent is not compensation. Nor is a loan, a sale of an asset, or a management charge.
The result reads strangely. What the company pays its director for the use of his building is in the notes. The salary he draws for running the place need not be, unless the accounts need it to give a true and fair view. I have yet to meet anyone who thinks that is the obvious way round.
What does the dividend note put on the register?
The number most owner-managers actually care about. Paragraph 1AC.40 makes disclosure of dividends declared and paid or payable during the period mandatory for small entities, where previously it was uncommon to see it at all.
For the standard small-salary-large-dividend structure, this is the disclosure that bites. The extraction figure is now stated plainly rather than inferred from a movement on reserves by someone prepared to do the arithmetic. Dividends are a distribution from reserves rather than a profit and loss item, so the note travels with the balance sheet to Companies House rather than staying behind with the P&L.
The position is almost comic. Salary, which most people assume is the sensitive number, stays out. The dividend, usually the bigger one, goes in.
Who actually reads a small company's accounts?
More people than the client imagines, and all of them for a reason. There were 5.48 million companies on the UK register at 31 March 2026, and private limited companies have made up over 95% of it for a decade (Companies House, 2026). Almost none of their directors think of filing as publishing.
The small companies regime lets you leave the profit and loss account and the directors' report out of what goes to Companies House (Companies Act 2006 s444). Only notes relating directly to a profit and loss line can be left out with them. The related party note and the dividend note are not those, so when I tell a client they are public I mean the version on the register, not just the signed set in his drawer.
The people who pull those filings are a prospective buyer running diligence, a commercial landlord checking covenant strength, a credit reference agency, a competitor, and in a bad year the other side's solicitor. On current plans the filleting option disappears in April 2028, covered in the Companies House 2028 reform.
What I changed in my records request
I treated this as a year-end problem for about a week before realising it is an information-gathering problem. The note is only ever as good as the question I ask in April, and my old question was not good enough.
Clients do not volunteer this material. I have never had one mention a recharge to their other company unprompted, and almost nobody thinks of a spouse's salary as a related party transaction. So my year-end request now asks three things explicitly: what the company paid to or received from you personally, the same for your close family, and the same for any entity you control or significantly influence. That last one catches the holding company and the property SPV nobody mentioned. Same instinct as what I check in the old accountant's files.
The other half is the conversation. Tell the client before the accounts land for signature. The worst version of this is a director reading his own rent and dividend in a note for the first time on the day he signs.
Frequently Asked Questions
Which related party transactions does a small company have to disclose from 2026?
All material ones, not just those outside normal market conditions. For periods beginning on or after 1 January 2026 you disclose the nature of the relationship, the amounts, outstanding balances and the terms, applying paragraph 33.9 of FRS 102. Transactions between group members stay exempt where every subsidiary involved is wholly owned.
Do directors' salaries have to be disclosed in small company accounts?
Not under FRS 102. Paragraph 33.7 on key management personnel compensation is not applied to small entities, which the FRC confirmed in September 2025. Transactions with a director that are not compensation, such as rent or a management charge, do have to go in.
Will the dividends I take show up on the public register?
Yes. Paragraph 1AC.40 makes dividends declared and paid or payable a mandatory note, and the notes accompanying the balance sheet are filed at Companies House even when you leave out the profit and loss account.
Does my director's loan account have to be disclosed?
It already did. Section 413 of the Companies Act 2006 has long required advances and credits to directors to be shown in the notes, with the amount, interest rate and main conditions. The 2026 changes do not alter that.
When do the new Section 1A disclosures first apply?
To accounting periods beginning on or after 1 January 2026, so the first affected year ends are 31 December 2026 and the work lands in early 2027. Comparatives are affected too, and early adoption means taking the amendments together, bar the supplier finance disclosures.
If you are preparing a 31 December 2026 year end for an owner-managed company and want a second look at what the related party note will expose, get in touch. I would rather go through it in October than in February.