Government Plans to Cut Corporate Reporting Burden and Save Businesses £450 Million a Year

A typical British company annual report now runs to 98,000 words, longer than J.R.R. Tolkien's The Hobbit. Business Secretary Jonathan Reynolds announced on 6 September 2026 that ministers are launching a wide ranging consultation to overhaul how companies must report on their finances, governance, and strategy promising to strip back what he called "pen pushing paperwork" and free businesses to focus on growth rather than compliance.

The consultation opens on 7 September 2026 and closes on 30 November. It comes after an earlier round of reforms the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 that secured more than £450 million in annual savings for businesses. Today's proposals are designed to go further, with plans already in train to scrap directors reports and expand strategic report exemptions, moves the government expects to save an additional £230 million a year.

Annual Reports Now Run Longer Than The Hobbit and It Is Costing British Business Billions

The problem is structural and built up over decades. Each time a new disclosure requirement landed for executive pay, ESG reporting, governance compliance, it was added to what was already there rather than replacing anything. Research from the Quoted Companies Alliance, published in May 2025, found that average annual reports had grown 31% longer in just five years, reaching 98,000 words for public companies. ESG related content alone had surged 236% over the same period, to an average of 11,000 words, while remuneration reporting runs to 10,000 words per report on the Main Market, roughly the length of Sun Tzu's Art of War.

For FTSE 100 companies the average is 152,000 words, about the length of The Da Vinci Code. Main Market reports run to 101,000 words. Even AIM listed companies, which are smaller by definition, produce reports averaging 42,000 words. The QCA has argued that annual reports have, as a result, stopped functioning as genuine communication tools for investors and have become compliance exercises in their own right.

Small and medium sized businesses bear this disproportionately. A small hotel chain or mid sized manufacturer operating under the same framework as a multinational cannot easily absorb thousands of pounds of accountancy and legal costs without passing them on or cutting back elsewhere. The government's case is that the current rules force businesses into a nonsensical position when they are trying to run and grow.

Scrapping Directors Reports, Wider Audit Exemptions, and Digital First, What Is on the Table

The consultation starts with a fundamental question the government says the current framework answers inconsistently, who are annual reports actually for? From there, proposals work outward to who should have to produce them and what they must contain. SMEs are at the centre of what is being proposed. More medium sized companies would qualify for audit exemption under revised thresholds, and the scope of mandatory reporting would be reduced at the smaller end of the market.

Reynolds confirmed that plans to scrap directors reports and expand exemptions from strategic reports are already progressing through government. Beyond that, the consultation puts on the table proposals to streamline remuneration reporting, test whether non-financial reporting requirements, including governance and ESG disclosures should continue to apply to private companies at their current level, and replace the existing complex rules on distributable profits and capital maintenance with a solvency based regime that is easier for businesses to apply without specialist legal input.

The most immediate and concrete saving comes from plans already progressing through government, scrapping directors reports and widening strategic report exemptions, a package projected to save businesses approximately £230 million a year on its own. Beyond that, the consultation proposes extending audit exemptions to more medium sized companies, removing compliance requirements that are currently scaled for organisations far larger than those forced to meet them.

Two further changes would affect most companies regardless of size. The complex rules on distributable profits and capital maintenance which currently require specialist legal input to navigate safely would be replaced with a straightforward solvency based test. And electronic shareholder communications would become the default, cutting the printing and postage costs that fall on every company currently required to mail paper documents to shareholders.

How Much Could Your Business Actually Save Under the Proposed New Rules

For businesses operating on tighter margins, hotel chains, manufacturers, and smaller professional services firms currently caught by existing thresholds, reduced compliance costs directly affect what they can spend on staff, investment, or keeping prices competitive. The government has been explicit that SMEs are the primary focus, but the detail of thresholds and exemption boundaries will determine who actually benefits once regulations are finalised.

CBI and QCA Back the Reform but Warn the Devil Is in the Detail

Jordan Cummins, UK Competitiveness Director at the CBI, said corporate reporting is a "resource heavy process" and that moves to modernise the regime were welcome. He added that firms would look forward to working with government and regulators to land a "futureproofed and agile framework." James Ashton, chief executive of the Quoted Companies Alliance whose research put average report lengths at 98,000 words welcomed the consultation and said reforms should help companies "focus on growth and productivity while maintaining trust and confidence."

Neither body committed to specific outcomes, which reflects an uncomfortable reality, the savings the government is projecting depend entirely on where new exemption thresholds are drawn and how many businesses fall inside or outside them. Exempting companies from audits reduces costs, but it also removes assurance for creditors and counterparties. The consultation responses, due by 30 November, will shape what ends up in the final regulations.

The Consultation Closes 30 November 2026, What Businesses Need to Know Before Then

Reynolds framed the corporate reporting overhaul as part of a broader industrial strategy commitment to cut red tape by 25%, alongside planning reforms and energy cost support for more than 10,000 businesses. The AI assisted compliance management the government also mentioned exploring how automation could reduce the time staff spend on administrative tasks sits at the early stages and is not part of the immediate consultation package.

Twelve weeks of consultation is not long for a framework as complex as corporate law. The proposals touch everything from fundamental audit requirements to the rules governing how companies distribute profits, and professional bodies, investors, and small business groups will each come with different concerns. Whether the final regulations match the ambition of the announcement will depend on how the government navigates those competing interests once the responses land.