Pricing Yourself Right: How Accountants Help Freelancers & Contractors Charge What They’re Worth

A Complete Guide by Direct Assist – Chartered Certified Accountants

Published: 14 January 2026

In April 2024, the International Accounting Standards Board (IASB) launched IFRS 18 – Presentation and Disclosure in Financial Statements, a major update that replaces the long-standing IAS 1. While it won’t take effect until 1 January 2027, forward-thinking UK businesses — especially those preparing for growth, investment, or eventual public listing — should start paying attention now.

At Direct Assist Accountants, we help business owners cut through accounting complexity. So let’s break down what IFRS 18 really means — and why it matters, even if you’re not yet required to use it.

1. Why Pricing Is a Numbers Game (Not a Guessing Game)

The biggest shift in IFRS 18 is how companies must present their statement of profit or loss (also known as the income statement). Instead of one long list of revenues and expenses, income and costs must now be grouped into five clear categories:

1. Operating – Core business activities (e.g., sales, salaries, rent, marketing)
2. Investing – Returns from investments, interest on cash, gains/losses on asset sales
3. Financing – Interest on loans, lease costs, bond expenses
4. Income Taxes – Tax expense or benefit (as per IAS 12)
5. Discontinued Operations – Results from parts of the business being sold or closed (per IFRS 5)

This structure makes it easier for investors, lenders, and even your own management team to see what’s driving performance — and where risks or opportunities lie.

💡 Example: If your “operating profit” is strong but “financing costs” are rising, you know your core business is healthy — but your debt strategy may need review.

2. New Subtotals = Clearer Insights

• IFRS 18 also introduces two mandatory subtotals in the profit & loss statement:

   
  • Operating profit or loss
  • Profit or loss before financing and income taxes
   

  These act like “waypoints” — helping users assess profitability at key stages, without getting lost in the details.

   

  Plus, vague labels like “other income” or “miscellaneous expenses” are discouraged. The goal? Transparency over convenience.

3. Management Performance Measures (MPMs): No More “Adjusted EBITDA” Without Explanation

• Many companies use internal metrics like “adjusted EBITDA” or “core earnings” to tell their story. Under IFRS 18, these Management-Defined Performance Measures (MPMs) must now be:

   
  • Clearly labelled as not IFRS-compliant
  • Reconciled to the nearest IFRS profit figure
  • Explained: Why is this measure useful? How is it calculated?
   

  This stops misleading headlines like “Company X reports £5M profit!” when the actual IFRS profit is much lower. It’s about honest storytelling — backed by real numbers.

   

  📌 Note: This applies to interim reports too (thanks to updates to IAS 34), so quarterly updates must follow the same rules.

4. Who Does This Affect?

Technically, IFRS 18 applies to all entities that use IFRS — typically larger private companies, multinationals, or those planning an IPO.

But here’s the thing: even if you’re a UK limited company using FRS 102, these changes matter. Why?

• FRS 102 often aligns with IFRS over time
• Investors and buyers increasingly expect IFRS-style clarity
• Good financial presentation builds trust — regardless of your reporting framework

If you’re scaling your business, seeking funding, or considering a sale, adopting IFRS 18 principles early can give you a competitive edge.

5. Other Standards Impacted

6. When Does It Take Effect?

• Mandatory for periods starting on or after 1 January 2027
• Early adoption is permitted (with disclosure in the notes)

That gives you over 18 months to prepare — but don’t wait until the last minute.

7. How Direct Assist Helps You Prepare

At Direct Assist, we don’t just ensure compliance — we help you use financial reporting as a strategic tool.

As IFRS 18 approaches, we can support you by:

✅ Reviewing your current profit & loss structure and identifying gaps
✅ Helping you define meaningful, compliant MPMs (if needed)
✅ Upgrading your FreeAgent or Xero setup to track data by category (operating, investing, financing)
✅ Training your team on the new presentation requirements
✅ Ensuring your disclosures meet both IFRS and HMRC expectations

Because great financial reporting isn’t just about rules — it’s about clarity, confidence, and credibility.