FRS 101 lets a subsidiary or ultimate parent within an IFRS reporting group prepare its own individual accounts using the recognition and measurement rules of UK adopted IFRS, while leaving out a long list of disclosures. The accounts are Companies Act accounts rather than IAS accounts, so IFRS is adjusted where it conflicts with company law. The group’s numbers and the subsidiary’s numbers then rest on the same accounting, without the full IFRS disclosure burden in every entity.

What problem does FRS 101 solve?

A UK subsidiary of a group that reports under IFRS has three broad choices for its own accounts: full IFRS, FRS 102, or FRS 101. Full IFRS means a complete disclosure set in every subsidiary. FRS 102 means keeping a second set of accounting policies, with adjustments every year to feed group reporting. FRS 101 sits between the two.

Paragraph 1 states its objective as setting out disclosure exemptions for the individual financial statements of subsidiaries, including intermediate parents, and ultimate parents that otherwise apply the recognition, measurement and disclosure requirements of adopted IFRS. The FRC describes it as an optional framework intended to enable cost effective reporting within groups. The current edition is dated September 2024, with amendments issued on 28 May 2025 and 21 May 2026. Where FRS 101 sits among the UK frameworks is covered in our guide to FRS 100.

Who can use FRS 101?

Paragraph 2 makes FRS 101 available for the individual financial statements of a qualifying entity. The glossary defines a qualifying entity as a member of a group where the parent prepares publicly available consolidated financial statements intended to give a true and fair view, and that member is included in the consolidation. Three types of entity are excluded:

  • charities;
  • entities required to apply Schedule 3 to SI 2008/410 (the insurance company accounts rules) that have contracts within the scope of IFRS 17; and
  • entities that are not companies but apply similar insurance requirements and have IFRS 17 contracts.

Paragraph 3 bars FRS 101 from consolidated accounts. A parent that must prepare group accounts under section 399 of the Companies Act 2006, or chooses to, can use FRS 101 for its own entity accounts only. In the UK, adopted IFRS means UK adopted international accounting standards, explained in our guide to UK adopted international accounting standards.

What does an FRS 101 company still have to apply?

Paragraph 5(b) requires the entity to apply the recognition, measurement and disclosure requirements of adopted IFRS, amended where necessary to comply with the Companies Act and SI 2008/410. Paragraph 4A spells out that the result is Companies Act accounts, not IAS accounts. The Application Guidance, which is an integral part of the standard, lists the amendments. Examples include:

  • Formats. New paragraphs 53A and 81C in IAS 1 require the Companies Act balance sheet and profit and loss formats, unless the entity chooses to adapt them under paragraphs 1A(1) and 1A(2) of Schedule 1, in which case IAS 1 presentation applies and profit or loss before taxation must be shown.
  • Negative goodwill. IFRS 3 paragraph 34 is amended so that a bargain purchase excess is shown immediately below goodwill and released to profit or loss as the non monetary assets acquired are recovered, rather than taken to profit at once.
  • Government grants. IAS 20 is amended so that grants related to assets are presented as deferred income, and the option to deduct them from the asset is removed.
  • Extraordinary items. Entities applying Schedule 1 must not present any item as extraordinary.

So the measurement of revenue, leases and financial instruments follows IFRS 15, IFRS 16 and IFRS 9 in full. Our overviews of IFRS 15, IFRS 16 and IFRS 9 expected credit losses apply to FRS 101 reporters as much as to listed groups.

Which disclosures can be left out?

Paragraph 8 lists the exemptions. Some are unconditional. Others apply only if equivalent disclosures are included in the consolidated financial statements in which the entity is consolidated, and paragraph 9 refers preparers to the Application Guidance to FRS 100 to judge equivalence.

Area Exemption in paragraph 8 Equivalent group disclosure needed?
Cash flow statement IAS 7, most paragraphs (8(h)(i)) No, except for certain later IAS 7 paragraphs in 8(h)(ii)
Financial instruments All of IFRS 7 (8(d)) Yes
Fair value IFRS 13 paragraphs 91 to 99 (8(e)) Yes
Revenue Specified IFRS 15 paragraphs, including 113(a), 114 and 120 to 127 (8(eA)) No
Leases IFRS 16 paragraph 52, part of 89, and 90, 91 and 93 (8(eB)) No
Related parties IAS 24 paragraphs 17 and 18A, and transactions between wholly owned group members (8(j) and 8(k)) No
Share based payment IFRS 2 paragraphs 45(b) and 46 to 52 (8(a)), where the award is over another group entity’s shares Yes
Impairment Specified IAS 36 paragraphs (8(l)) Yes
Capital disclosures IAS 1 paragraphs 134 to 136 (8(g)) No

The IAS 24 paragraph 17 exemption covers key management personnel compensation. The FRC’s basis for conclusions explains that company law already requires directors’ emoluments to be disclosed.

Paragraph 7 restricts financial institutions: they cannot use the IFRS 7 exemption, the IFRS 13 exemption so far as it relates to financial instruments, or the IAS 1 capital disclosure exemption. Footnotes to paragraph 8 also warn that the Companies Act and SI 2008/410 still require disclosures about financial instruments and fair value, whatever FRS 101 exempts.

What must the notes say?

Paragraph 5(c) requires a brief narrative summary of the exemptions adopted, and the name of the parent in whose consolidated accounts the entity is included, with where those accounts can be obtained. Paragraph 10 requires the statement: “These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework.” Because the accounts do not comply with all of adopted IFRS, they must not contain the unreserved statement of compliance with IFRS.

The old requirement to notify shareholders before using the exemptions was deleted in December 2016, with effect for accounting periods beginning on or after 1 January 2016 (paragraph 13).

How does a company move onto FRS 101?

Paragraph 7A applies paragraphs 6 to 33 of IFRS 1 on first time adoption, but without the opening statement of financial position at the date of transition. Application Guidance also amends paragraph D16 of IFRS 1, so a subsidiary adopting later than its parent can measure assets and liabilities at the carrying amounts used in the parent’s consolidated accounts, provided the result complies with company law.

Illustration only. A UK trading subsidiary of an IFRS group currently reports under FRS 102 and posts adjustments each year for leases and revenue to feed group reporting. Moving to FRS 101 lets it use the group’s IFRS 16 lease figures directly, drop its cash flow statement, and omit disclosure of intra group transactions with wholly owned group members. It must still use the Companies Act formats unless it adapts them, give the paragraph 5(c) note, and keep any disclosure company law requires. If the group accounts do not give equivalent IFRS 7 disclosures for the subsidiary’s instruments, the IFRS 7 exemption is not available.

What has changed recently and what is coming?

The FRC reviews FRS 101 annually against new IASB pronouncements.

  • Periodic Review 2024. Amendments apply for periods beginning on or after 1 January 2026 (paragraph 18).
  • IFRS 18. The 2024/25 cycle replaces references to IAS 1 with IFRS 18 and adds exemptions from some new disclosures, including management defined performance measures. These changes apply when the entity applies IFRS 18, which replaces IAS 1 for annual periods beginning on or after 1 January 2027.
  • IFRS 19. The IASB’s own reduced disclosure standard for subsidiaries without public accountability cannot be combined with FRS 101. Paragraph 5(aA) says a qualifying entity shall not apply IFRS 19, effective on issue.
  • 2025/26 cycle. No new exemptions were needed for the IASB’s amendments on contracts referencing nature dependent electricity or the amendments to IFRS 19. Drafting improvements were made to paragraph 7 and the Application Guidance.

How does this compare with FRS 102 reduced disclosures?

FRS 102 offers its own exemptions for qualifying entities, covered in our guide to reduced disclosures for qualifying entities. The key difference is measurement: an FRS 102 reporter follows FRS 102 recognition and measurement, while an FRS 101 reporter follows IFRS. The FRS 101 overview confirms it can be used whatever framework the group accounts use, but it fits most naturally where the group reports under IFRS, because the subsidiary’s figures then match group reporting without adjustment.

What mistakes come up most often?

  • Stating full compliance with IFRS, which paragraph 10 prohibits.
  • Using FRS 101 for consolidated accounts, which paragraph 3 rules out.
  • Taking an exemption that depends on equivalent group disclosure when the group accounts do not provide it.
  • A bank or other financial institution taking the IFRS 7 exemption.
  • Forgetting company law formats, directors’ remuneration and financial instrument disclosures that FRS 101 does not remove.
  • Applying IFRS 19 alongside FRS 101.

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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.