FRS 102 Section 33 requires accounts to show transactions and balances with people and entities close enough to the company to influence it, such as directors, shareholders with control, their close families and group companies. The minimum disclosure is the nature of the relationship, the amounts, outstanding balances and their terms, and bad debt provisions. Transactions between group members are exempt where any subsidiary involved is wholly owned.

Who is a related party?

Paragraph 33.2 sets out the definition. A person, or a close member of that person’s family, is related to the reporting entity if the person has control or joint control over it, has significant influence over it, or is a member of the key management personnel of the entity or its parent.

The glossary defines close members of the family as those family members who may be expected to influence, or be influenced by, that person in their dealings with the entity, including the person’s children and spouse or domestic partner, children of the spouse or domestic partner, and dependants of either of them.

An entity is related to the reporting entity if, among other things, it is in the same group; one is an associate or joint venture of the other or of a group member; both are joint ventures of the same third party; one is a joint venture and the other an associate of the same third party; it is a post employment benefit plan for the employees of the entity or a related entity; it is controlled or jointly controlled by a related person; a person with control has significant influence over it or is in its key management; or it provides key management personnel services to the reporting entity or its parent. Paragraph 33.4A extends associates and joint ventures to include their subsidiaries. Accounting for associates and joint ventures is covered on separate pages.

Who is not a related party?

Paragraph 33.3 requires the substance of each relationship to be assessed, not just its legal form. Paragraph 33.4 then lists relationships that are not related party relationships on their own: two entities that simply share a director or other key manager; two venturers simply because they share joint control of a joint venture; providers of finance, trade unions, public utilities and government departments in the course of their normal dealings; and a major customer, supplier, franchisor, distributor or general agent merely because of economic dependence.

The accounting definition is not the same as the tax definition of connected persons, so a person can be connected for tax purposes without being a related party for the accounts, and the reverse (see connected persons).

What about key management personnel pay?

Paragraph 33.6 defines key management personnel as those with authority and responsibility for planning, directing and controlling the entity’s activities, including any director, executive or otherwise. Paragraph 33.7 requires their total compensation to be disclosed. ICAEW’s helpsheet lists what to include: salaries and employer social security costs, bonuses and profit sharing, non monetary benefits such as cars and medical cover, pension contributions and share based payment charges. ICAEW notes the definition is wider than directors and that in a group the directors of a main trading subsidiary may be key management of the group.

Two exemptions apply. Paragraph 33.7A removes the total where the entity is already required by law to disclose directors’ remuneration and the key management personnel are the same people as the directors. Paragraph 1.12(e) lets a qualifying entity using the reduced disclosure framework omit the 33.7 disclosure altogether.

What must be disclosed about transactions?

Paragraph 33.8 defines a related party transaction as a transfer of resources, services or obligations, whether or not a price is charged. Paragraph 33.9 requires the nature of the relationship and enough information for users to understand the potential effect, with a minimum of:

  • the amount of the transactions;
  • outstanding balances and commitments, their terms and conditions including security, the consideration to be given in settlement, and any guarantees given or received;
  • provisions for uncollectible receivables on those balances; and
  • the expense recognised in the period for bad or doubtful related party debts.

Paragraph 33.10 requires these disclosures separately for entities with control, joint control or significant influence over the entity; entities it controls or influences; key management personnel of the entity or its parent in aggregate; entities providing key management services; and other related parties. Paragraph 33.14 allows similar items to be aggregated unless separate disclosure is needed for understanding. ICAEW points out that FRS 102 does not explicitly require the related party to be named. Paragraph 33.13 prohibits stating that transactions were on arm’s length terms unless that can be substantiated.

Paragraph 33.12 lists typical transactions: sales and purchases of goods, property or other assets, services, leases, transfers of research and development or licences, loans and equity contributions, guarantees or collateral, commitments, and settlement of liabilities on another’s behalf.

How does the wholly owned subsidiary exemption work?

Paragraph 33.1A says the 33.9 disclosures need not be given for transactions between two or more members of a group, provided any subsidiary that is a party to the transaction is wholly owned by a member of that group. ICAEW confirms there is no requirement to state that the exemption has been taken.

The conditions are precise. The exemption covers transactions within the group, not transactions with the group’s directors or shareholders. If a 90% owned subsidiary trades with its parent, the exemption does not apply because that subsidiary is not wholly owned. And the exemption does not remove paragraph 33.5, which requires every subsidiary to disclose the name of its parent and, if different, its ultimate controlling party, whether or not there were transactions, plus the next most senior parent that publishes accounts if neither of those does. Paragraph 33.11 has a separate exemption for transactions with a government that controls or influences the entity, or with other entities under that government’s control, but the 33.5 disclosure still applies.

What do small companies and micro entities have to disclose?

For accounting periods beginning on or after 1 January 2026, the revised FRS 102 applies. Under it, paragraph 1AC.35 requires a small entity to give the disclosures in paragraphs 33.9 and 33.14, subject to the exemptions in 33.1A and 33.11. ICAEW explains that the previous version of Section 1A required disclosure only of material related party transactions not concluded under normal market conditions, so the change is a significant expansion for small companies. Paragraph 1AC.34 requires a subsidiary to give the name and registered office of the parent of the smallest group that prepares consolidated accounts, and paragraph 1AC.36 carries across the section 413 Companies Act 2006 disclosure of advances, credits and guarantees to directors, including amounts repaid, written off and waived.

Micro entities using FRS 105 have a much shorter list. Paragraph 6.2 still requires advances, credit and guarantees granted to directors under section 413, shown at the foot of the balance sheet. See micro entity accounts and directors’ loans under FRS 102.

What does a typical disclosure look like?

Illustration only. A small company is wholly owned by its sole director. During the year it paid the director £18,000 rent for premises he owns personally, paid £24,000 to a cleaning company owned by his wife, and at the year end the director owed the company £15,000 on his loan account, unsecured, interest free and repayable on demand.

Related party Category under 33.10 Transaction in year Balance at year end
Director and controlling shareholder Control over the entity Rent paid £18,000 Nil
Director and controlling shareholder Control over the entity Loan advanced £15,000 owed to the company, unsecured, interest free, repayable on demand
Company controlled by a close family member of the director Other related parties Cleaning services £24,000 Nil

The loan also needs the section 413 details, and its tax consequences are covered in director’s loan accounts.

What if a relationship starts or ends during the year?

FRS 102 does not say. ICAEW’s view is that transactions while the parties were related should be disclosed even if the relationship has ended by the year end, that balances with parties related at the year end should be disclosed, and that balances arising from transactions when the parties were related should be disclosed even if they are no longer related. A relationship that begins after the year end but before approval may need disclosure as a non adjusting event (see events after the reporting period).

What mistakes come up most often?

  • Missing transactions with companies owned by a director’s spouse or children.
  • Claiming the group exemption for transactions with a subsidiary that is not wholly owned.
  • Dropping the parent and ultimate controlling party disclosure because the exemption was taken.
  • Describing transactions as at arm’s length without evidence.
  • Small companies continuing to disclose only off market transactions after the 2026 changes.
  • Leaving out the guarantees given or received on related party balances.

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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.