For many companies managing leases in the UK and Ireland, FRS 102 has long been a relatively stable part of the reporting landscape. However, that changes with the revised Section 20.

For periods beginning on or after 1 January 2026, FRS 102 Section 20 moves lessee lease accounting onto an on‑balance sheet model that is deliberately aligned with IFRS 16 Leases.

Right of use (ROU) assets and lease liabilities will now appear on the balance sheet for most lessee leases. Short‑term and low value exemptions offer some relief, but the days of treating most leases as straight‑line operating expenses are over.

Technically, the story is straightforward: a single lessee model, ROU assets and lease liabilities measured at the present value of future lease payments, and greater disclosure requirements.