Worried about IFRS 18?
You're not alone.
IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 for reporting periods starting on or after 1 January 2027. It changes how every IFRS reporter presents its income statement, and because it applies retrospectively, the work starts with your 2026 numbers.
IFRS 18 at a glance
| What | Detail |
|---|---|
| Issued | April 2024 by the International Accounting Standards Board |
| Replaces | IAS 1 Presentation of Financial Statements, with knock on changes to IAS 7 and IAS 8 |
| Effective | Annual periods beginning on or after 1 January 2027 |
| UK status | Adopted for use in the UK in December 2025 |
| Transition | Full retrospective application, so comparatives must be restated. For December year ends, 2026 is the comparative year |
Four changes that will affect you
1. Five new categories
Every income and expense line must be classified as Operating, Investing, Financing, Income taxes or Discontinued operations. Your main business activities decide where items land.
2. Required subtotals
Operating profit becomes a mandatory, defined subtotal, alongside profit before financing and income taxes. No more company specific versions of operating profit on the face.
3. Management defined performance measures
If you talk about adjusted EBITDA or similar measures publicly, they must now be disclosed in the notes and reconciled to an IFRS subtotal, with the tax and non controlling interest effect.
4. Better grouping of information
New rules on aggregation and disaggregation mean no more large "other" lines, plus extra detail for expenses presented by function. The cash flow statement now starts from operating profit and interest and dividend classification choices are removed.
Does IFRS 18 apply to you?
IFRS 18 applies to every entity preparing financial statements under IFRS. In the UK that typically means:
- Listed groups and companies reporting under UK adopted IFRS
- Private companies that have chosen to report under IFRS
- UK subsidiaries sending IFRS reporting packs to an overseas parent
- Businesses preparing for a fundraise, sale or listing where IFRS accounts are expected
The clock started on 1 January 2026
Your first IFRS 18 financial statements for the year ending 31 December 2027 must show restated 2026 comparatives. Every transaction you record this year needs to be classifiable under the new categories. Leaving it until 2027 means a rushed, expensive restatement and difficult questions from your auditors.
A clear path from IAS 1 to IFRS 18
Delivered by an audit trained Chartered Accountant, so your transition is built to stand up to audit review. Your auditor must stay independent and cannot design your new presentation for you. We can.
Impact assessment
We review your current statements, identify your main business activities and show you exactly what changes.
Remapping
We map your chart of accounts in Xero, Sage or your ERP to the new categories and subtotals.
MPMs and disclosures
We identify your management defined performance measures and draft the reconciliations and new notes.
Restated comparatives
We prepare restated 2026 figures and pro forma IFRS 18 statements ready for your auditors.
Common questions
Does IFRS 18 change my profit?
No. Recognition and measurement do not change, so net profit stays the same. What changes is how it is presented, grouped and explained, which can change the headline numbers people see, such as operating profit.
Can we adopt early?
Yes, early application is permitted. Some companies choose this to align with group reporting or investor expectations.
How long does the transition take?
For a single company with a simple structure, an impact assessment can be done in a couple of weeks. Groups with several entities or many MPMs need longer, which is why starting now matters.