What goes in a directors' report

Q: What must every directors' report contain?

Directors' names. Section 416(1)(a) requires the names of everyone who was a director at any time during the financial year, so directors who resigned or were appointed part way through must be included. Political donations and expenditure. If the company, together with its subsidiaries where relevant, made political donations or incurred political expenditure totalling more than £2,000 in the year, the report must name each recipient party, organisation or independent candidate with the amount, and give the total political expenditure. Contributions to political parties operating wholly outside the UK must also be stated. A wholly owned subsidiary of a UK company does not give these particulars itself. Statement on disclosure to auditors. Unless the company has taken audit exemption, section 418 requires a statement that, for each director at the time of approval, there is no relevant audit information the auditor is unaware of, and the director has taken the steps they ought to have taken to find and pass on such information. A director who knowingly or recklessly approves a false statement commits an offence carrying up to two years' imprisonment on indictment. Older reports also had to describe the company's principal activities under section 416(1)(b). That paragraph was repealed by SI 2013/1970, the same regulations that introduced the strategic report.

Q: What does this look like in practice?

Illustration only. A private company has turnover of £40 million, a balance sheet total of £20 million and 180 employees, and has met those figures for several years. It is medium sized under section 465 because it meets all three medium limits. Its directors' report needs the directors' names, the dividend recommendation, the auditor statement and any political donations over £2,000. It does not need supplier payment reporting, because it is medium. For the energy and carbon exemption, however, it meets only the employee condition in paragraph 20B, so it is not exempt and must give the Part 7A disclosures unless its UK energy use was 40,000 kWh or less.

Every company except a micro entity must prepare a directors’ report for each financial year under section 415 of the Companies Act 2006. For a small company it can be very short: the names of the directors, any political donations over £2,000, the auditor statement if the accounts are audited, and a statement that the small companies exemption has been used. Medium and large companies follow Schedule 7 to SI 2008/410, which adds a dividend recommendation and, for larger companies, energy and carbon, supplier payment and corporate governance disclosures.

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Which companies have to prepare a directors’ report?

Section 415(1) requires the directors of every company to prepare a directors’ report for each financial year. Section 415(1A) removes the duty for a company that qualifies as a micro entity. If the company is a parent preparing group accounts, the report must be a group directors’ report covering the undertakings in the consolidation. Failure to prepare one is an offence by every director who failed to take all reasonable steps to secure compliance.

Which rules apply depends on size. Small companies follow Schedule 5 to the Small Companies and Groups (Accounts and Directors’ Report) Regulations 2008 (SI 2008/409). Medium and large companies follow Schedule 7 to the Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008 (SI 2008/410). The size tests are explained in company size thresholds.

What must every directors’ report contain?

Directors’ names. Section 416(1)(a) requires the names of everyone who was a director at any time during the financial year, so directors who resigned or were appointed part way through must be included.
Political donations and expenditure. If the company, together with its subsidiaries where relevant, made political donations or incurred political expenditure totalling more than £2,000 in the year, the report must name each recipient party, organisation or independent candidate with the amount, and give the total political expenditure. Contributions to political parties operating wholly outside the UK must also be stated. A wholly owned subsidiary of a UK company does not give these particulars itself.
Statement on disclosure to auditors. Unless the company has taken audit exemption, section 418 requires a statement that, for each director at the time of approval, there is no relevant audit information the auditor is unaware of, and the director has taken the steps they ought to have taken to find and pass on such information. A director who knowingly or recklessly approves a false statement commits an offence carrying up to two years’ imprisonment on indictment.

Older reports also had to describe the company’s principal activities under section 416(1)(b). That paragraph was repealed by SI 2013/1970, the same regulations that introduced the strategic report.

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What can a small company leave out?

A company entitled to the small companies exemption under section 415A does not have to state a recommended dividend (section 416(3)). Beyond the general items above, Schedule 5 to SI 2008/409 now asks only for the political donation and non UK political party disclosures. The former requirement to describe policy on employing disabled persons was removed for financial years beginning on or after 6 April 2025 by SI 2024/1303.

Where the exemption is used, section 419(2) requires a statement to that effect in a prominent position above the signature. A small company also has the choice under section 444 not to deliver its directors’ report to Companies House, but it must still prepare it and send it to members. The filing choices are set out in small company accounts filing options. Companies House guidance notes that the government plans to remove the directors’ report requirement altogether, with details still to be confirmed, so for now the duty stands.

What does a medium sized company add?

A medium sized company must state the amount, if any, the directors recommend by way of dividend, and follows Schedule 7 to SI 2008/410. For financial years beginning on or after 6 April 2025, SI 2024/1303 removed several Schedule 7 items: financial instruments and the miscellaneous disclosures in paragraphs 6 and 7, the disabled persons disclosure in Part 3, and the employee, supplier and customer engagement statements in Part 4. What remains for most private companies is short:

directors’ names, the dividend recommendation and the auditor statement;
political donations and contributions;
under paragraph 1A, a statement identifying any Schedule 7 information the directors have chosen to put in the strategic report instead, as section 414C(11) allows;
energy and carbon information under Part 7A, unless an exemption applies (see below).

Part 2 of Schedule 7 (purchases of own shares) now applies only to public companies, and Part 6 applies to companies with voting shares traded on a UK regulated market.

What extra applies to large companies?

Streamlined energy and carbon reporting

Part 7A applies to unquoted companies unless they are exempt under paragraph 20B or 20C. That exemption uses its own size test: two or more of turnover not more than £36 million, balance sheet total not more than £18 million and 250 employees. These figures were not increased in 2025, so a company that is medium under the new section 465 limits can still fall within Part 7A. The report must state emissions in tonnes of carbon dioxide equivalent from gas combustion and transport fuel, emissions from purchased electricity, total energy use in kWh and the principal energy efficiency measures taken. A company that used 40,000 kWh or less in the UK may omit the information if the report says so. Quoted companies report under Part 7 instead.

Supplier payment reporting

The Companies (Directors’ Report) (Payment Reporting) Regulations 2025 (SI 2025/1152) added Part 9 for financial years beginning on or after 1 January 2026. It does not apply in the company’s first financial year or in a year in which it qualifies as medium sized. The report must give the standard payment period in days and any changes to it, the average days taken to pay, the percentage and value of payments made within 30 days, 31 to 60 days and after 60 days, and the percentage and value of payments due in the year that were not paid within the agreed period. A subsidiary can rely on its parent’s group directors’ report if the conditions in paragraph 30 are met.

Corporate governance statement

Under Part 8, a company with more than 2,000 employees, or with turnover above £200 million and a balance sheet total above £2 billion, must state which corporate governance code it applied, how, and any departures, or explain why it applied none. An unquoted company must also publish the statement on a website.

How is the report approved, signed and filed?

Section 419(1) requires the report to be approved by the board and signed on behalf of the board by a director or the company secretary. Approving a report that does not comply, knowingly or recklessly, is an offence under section 419(3). Medium and large companies must deliver the directors’ report to Companies House with the accounts (section 445). Under section 463 a director is liable to compensate the company for loss caused by an untrue or misleading statement, or a dishonest omission, in the report, but not to third parties who relied on it.

What does this look like in practice?

Illustration only. A private company has turnover of £40 million, a balance sheet total of £20 million and 180 employees, and has met those figures for several years. It is medium sized under section 465 because it meets all three medium limits. Its directors’ report needs the directors’ names, the dividend recommendation, the auditor statement and any political donations over £2,000. It does not need supplier payment reporting, because it is medium. For the energy and carbon exemption, however, it meets only the employee condition in paragraph 20B, so it is not exempt and must give the Part 7A disclosures unless its UK energy use was 40,000 kWh or less.

What mistakes come up most often?

Leaving out a director who resigned or was appointed during the year.
Copying last year’s disabled employees or engagement paragraphs after 6 April 2025 as if they were still required.
Assuming the 2025 threshold increase took a company out of energy and carbon reporting.
Omitting the small companies exemption statement above the signature.
Including the section 418 statement in an audit exempt company’s report, or leaving it out of an audited one.
Treating supplier payment data as a separate return only, when large companies must now also put it in the directors’ report.

Directors’ wider responsibilities for the accounts are covered in directors’ tax responsibilities, and the companion narrative report is explained in the strategic report.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.

What goes in a directors’ report