How will the revised LLPs SORP affect your business?

New accounting changes are set to be introduced for LLPs in 2026 following the publication of the latest Statement of Recommended Practice – Accounting by Limited Liability Partnerships (LLPs SORP).

This update, published by The Consultative Committee of Accountancy Bodies (CCAB) in November, introduces important changes for LLPs, particularly around disclosures, member remuneration, and alignment with UK GAAP.

The SORP has been updated in response to the Financial Reporting Standard’s periodic review, and is effective for accounting periods beginning on or after 1 January 2026 (with early adoption permitted).

It also incorporates feedback received as part of the 2024 LLP SORP consultation. Whilst it represents part of a push for greater transparency and consistency in LLP reporting, the UK’s departure from EU Accounting Directive constraints allows more flexibility in disclosure requirements.

What are the key changes?

1. Mandatory disclosures for small LLPs

Previously, small LLPs were encouraged—but not required—to provide additional disclosures. From 2026, these disclosures will become mandatory to ensure a true and fair view. More detail will need to be included in the financial statements on:

• Profit-sharing arrangements
• Loans and guarantees
• Related party transactions

2. Member remuneration clarifications

Following comments received during the consultation on the draft SORP, the requirements in respect of the presentation of members’ remuneration have been amended. Parent LLPs must report only their own members’ remuneration under “Members’ remuneration charged as an expense” in the consolidated financial statements.

For subsidiary LLPs, remuneration is reclassified based on cost nature unless the member also belongs to the parent.

Automatic profit allocations to non-working members are now treated as returns on capital, not remuneration.

3. Updated size thresholds

The SORP reflects changes introduced by The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 which increased the monetary size thresholds by about 50% for micro, small and medium-sized entities for financial years starting on or after 6 April 2025.

These thresholds determine whether a statutory audit is required. Now that the thresholds have increased, this will no longer be compulsory for thousands of businesses, and while this reduces costs and removes a regulatory burden for many, other valuable benefits of an audit will also be lost.

4. Alignment with UK GAAP

Lease and revenue accounting now mirror UK GAAP amendments, effective from 1 January 2026, ensuring consistency across reporting frameworks.

• Income recognition requires LLPs to adopt a five-step model to determine when and how much revenue to recognise.
• Lease accounting will require most operating leases to appear on the balance sheet from 2026, with both a right-of-use asset and a corresponding liability. Many LLPs will have significant property leases, and this fundamentally changes the balance sheet structure and the pattern of charges hitting the income and expenditure account each year.

These changes could potentially impact levels of profit distributions and banking covenants.

Actions for LLPs

As a result of the changes in the updated SORP, small LLPs will need to review disclosure requirements and update templates.

All LLPs should reassess member agreements to ensure correct classification of profit allocations and prepare for UK GAAP alignment on leases and revenue recognition, while consolidation processes for group LLPs will need to be updated.