Since 5 August 2026, UK-incorporated AIM companies may prepare their financial statements under FRS 102, UK GAAP, instead of IFRS. The Main Market still requires UK-adopted IFRS. For a company choosing a venue and a framework before a float, the choice changes how goodwill, development spend and acquired intangibles reach the accounts.
This article covers what changed in the AIM Rules, the five intangibles differences between the frameworks, their effect on the numbers investors read, and the factors behind the choice. Every rule described here is a UK rule.
The London Stock Exchange consulted on revised AIM Rules for Companies in AIM Notice 62, published on 4 June 2026. AIM Notice 64, dated 5 August 2026, confirmed the changes, which "come into effect immediately". Among them, UK-incorporated companies may now use FRS 102 in place of IFRS.
Why did the AIM Rules need to change at all? AIM is not a UK regulated market, so the company-law requirement for groups with securities on a UK regulated market to report under IFRS does not apply to AIM companies. The constraint was the AIM Rules themselves.
| Company | Before the change | Since 5 August 2026 |
|---|---|---|
| UK-incorporated AIM company | IFRS, as the AIM Rules required (a company with no subsidiaries could already use UK GAAP) | IFRS or FRS 102 (UK GAAP) |
| Non-UK AIM company | IFRS or one of a short list of other accepted standards, such as US GAAP | Other local accounting standards may be considered case by case: the Nomad approaches AIM Regulation, which looks at the framework, the quality of disclosure and material differences from IAS |
| Main Market (ESCC) company | UK-adopted IFRS | UK-adopted IFRS, unchanged |
The Exchange gave two reasons in Notice 62. First, the cost and complexity of converting to IFRS were high relative to the limited value investors drew from it. Second, companies should be able to use the standards most suited to their sector, especially where their peers also report under local GAAP. Over 90% of consultation respondents supported permitting UK GAAP.
The change also formalises the policy approach the Exchange had applied since publishing its Feedback Statement. Commentators, including Slaughter and May, read the change as covering both the financial statements in the admission document and those the company publishes on an ongoing basis.
The change permits FRS 102; it does not require it. AIM companies already reporting under IFRS may continue to do so. For the wider route to market, see our startup IPO guide.
FRS 102 deals with intangible assets in Section 18 and business combinations in Section 19. Under IFRS, the equivalents are IAS 38 and IFRS 3, with goodwill impairment in IAS 36. Five differences matter most for a company deciding which framework to float under.
| Area | FRS 102 (UK GAAP) | IFRS |
|---|---|---|
| Development costs | Capitalising qualifying development costs is an accounting policy choice | Capitalisation is required once the IAS 38 criteria are met |
| Goodwill | Amortised over its useful life; at most 10 years where that life cannot be reliably estimated | Not amortised; tested for impairment at least annually under IAS 36 |
| Acquired intangibles | Must be recognised separately from goodwill when both separable and arising from contractual or legal rights; may be recognised when only one test is met | Recognised separately from goodwill when either test is met |
| Useful lives | Every intangible asset has a finite useful life (18.19), not exceeding 10 years where it cannot be reliably estimated (18.20) | An indefinite useful life is allowed: no amortisation, with an annual impairment test |
| Revaluation | Only by reference to an active market (18.18), which is rare for intangibles | Only by reference to an active market (IAS 38.75), which is rare for intangibles |
The last two rows matter less in practice. Few intangibles have an active market, so revaluation is uncommon under either framework, and the useful life difference bites only for assets that an IFRS reporter would treat as having an indefinite life. The first three rows move the numbers.
Under IAS 38, once a project meets the recognition criteria, the qualifying development costs must be capitalised. Under FRS 102, the company chooses a policy: capitalise qualifying costs, or expense all development spend as incurred. An IFRS reporter has no such choice.
FRS 102 amortises goodwill over its useful life, and where that life cannot be reliably estimated the period may not exceed 10 years. IFRS does not amortise goodwill; instead it requires goodwill impairment testing at least annually. Neither framework allows a goodwill impairment to be reversed (FRS 102 27.28; IAS 36.124). For an acquisitive company, FRS 102 produces a steady charge against profit each year, while IFRS produces no charge until an impairment arises.
Under FRS 102, an intangible acquired in a business combination must be recognised separately from goodwill when it is both separable and arises from contractual or legal rights. The company may elect to recognise one that meets only one of those tests. IFRS 3 requires recognition when either test is met.
The result is that an FRS 102 purchase price allocation (PPA) usually recognises fewer intangibles and more goodwill than an IFRS one. The 2024 FRS 102 Periodic Review did not change this test; its Section 19 changes cover identifying the acquirer and contingent consideration.
The intangibles choice between FRS 102 and IFRS turns on three items: whether development spend is capitalised, whether goodwill is amortised, and how many acquired intangibles are recognised outside goodwill. A company with little development spend and no acquisitions will see small differences. A development-heavy acquirer will see large ones.
Most of these differences sit below EBITDA, so they show up in operating profit and earnings per share rather than in EBITDA itself. Goodwill amortisation under FRS 102 leaves EBITDA unchanged but lowers operating profit every year. Development spend works the other way. A policy to capitalise qualifying development moves that cost out of operating expenses and onto the balance sheet, so EBITDA rises and the later amortisation sits below it. A company expensing under FRS 102 therefore reports a lower EBITDA than an IFRS peer that capitalises the same spend.
Two historic gaps have narrowed. The FRS 102 Periodic Review amendments apply to periods beginning on or after 1 January 2026. They bring most leases on balance sheet and introduce a five-step revenue model, so lease costs and revenue recognition now sit closer to IFRS. Both had been sources of EBITDA differences between UK GAAP and IFRS reporters.
Comparability with peers remains the practical issue. If an AIM company reports under FRS 102 and its listed peers report under IFRS, analysts will reconcile the two before comparing multiples. The company that explains the reconciliation itself controls how it is read.
Take an illustrative AIM company, using round numbers. It carries £10 million of goodwill from an acquisition and spends £2 million a year on development that meets the criteria. Under FRS 102, if it amortises the goodwill over 10 years and expenses development, operating profit bears a £1 million amortisation charge and EBITDA bears the full £2 million of development cost. Under IFRS, there is no goodwill amortisation, the £2 million is capitalised and amortised below EBITDA, and the PPA would usually have recognised more acquired intangibles and less goodwill. The same business reports a higher EBITDA and a different operating profit under IFRS.
The board decides, advised by the auditor and the Nomad. These factors usually weigh most.
| Factor | Points towards FRS 102 | Points towards IFRS |
|---|---|---|
| Cost and continuity | The company already reports under FRS 102 and avoids a conversion | The company already reports under IFRS |
| Investor base | Mainly UK investors familiar with UK GAAP | International institutions, which are used to IFRS |
| Peer comparability | Sector peers also report under local GAAP | Listed peers report under IFRS |
| Main Market plans | No plan to move | A move to the Main Market is plausible, which requires IFRS |
| Acquisitive strategy | The board accepts annual goodwill amortisation | The board prefers impairment testing to amortisation |
| Development-heavy spend | The board prefers a simpler expensing policy | The company would capitalise qualifying costs anyway |
| IFRS 18 | Not applicable to FRS 102 reporters | IFRS 18 replaces IAS 1 for periods beginning on or after 1 January 2027, adding new P&L subtotals and disclosure of management-defined performance measures |
A UK-focused company with modest development spend and no plans for the Main Market will usually find FRS 102 simpler. An acquisitive company courting international institutions may prefer IFRS despite the cost.
If a later move to the Main Market is plausible, the conversion from FRS 102 to IFRS will be retrospective under IFRS 1, and estimates cannot be revised with hindsight. Keep dated, contemporaneous records of when each development project met the capitalisation criteria, even while expensing under FRS 102. Without them, the evidence for the IFRS figures will not exist.
Brands, customer relationships and know-how built in-house stay off the balance sheet under both FRS 102 and IFRS.
For most scale-ups, those assets carry the equity story, so the company has to show them through evidence: who owns each asset, how it is protected, and how it produces the revenue and margins in the forecast.
That evidence is the same whichever framework the company chooses. Our IPO readiness checklist sets out the intangibles and valuation workstreams to prepare, and the public listing playbook shows how intangible assets structure an equity story.
In Opagio Intangibles, the Value Drivers Register records each intangible asset with its owner and evidence, including the assets neither framework puts on the balance sheet. Evidence uploads carry evidence levels, so the team can see which assets are well supported and which still have gaps.
The company valuation workspace builds a discounted cash flow, trading comparables and precedent transactions into one football-field range, with comparables entered by the user. The Normalised P&L shows the Reported, Accounting-eligible and Management bases, one at a time. For the wider exit picture, see Opagio for exit readiness.
Opagio supports the analysis behind the decision. The auditor and the Nomad advise on the accounting framework, and Opagio does not perform IFRS conversion or impairment testing.
Whichever framework you choose, the assets the accounts leave out need a register and a valuation range. Book a demo of Opagio Intangibles.
Yes, if they are UK-incorporated. Since 5 August 2026, the AIM Rules allow UK-incorporated AIM companies to report under FRS 102 instead of IFRS. Non-UK companies may be able to use other local standards, case by case, through their Nomad. For the detailed comparison, see FRS 102 vs IFRS for intangible assets.
No. Companies on the Main Market (ESCC) must report under UK-adopted IFRS.
No. The change permits FRS 102; it does not require it. A company that wants to change framework should discuss it with its Nomad and auditor first.
Tony Hillier is Chairman of Opagio. He specialises in valuation, due diligence, accounting and structured finance, and previously worked at NM Rothschild and GEC Finance. Learn more about our team.
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