FRS 105 Micro Entity Accounts in Appleby In Westmorland

FRS 105 is the UK financial reporting standard that applies to micro-entities. It is the most streamlined set of accounting rules available to small companies, designed to keep financial statements short and straightforward while still reporting the company's financial position accurately. It goes hand in hand with the micro-entities regime in company law: where a qualifying company chooses to use that regime, FRS 105 is the framework used to prepare its financial statements.

FRS 105 is intended for companies that qualify for the micro-entities regime and that choose to apply it. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 size conditions: turnover of no more than £1 million, a balance sheet total of no more than £500,000, and an average of no more than 10 employees. Meeting the size tests is not the whole story — other eligibility rules and exclusions can apply, so eligibility should always be checked against your company's specific circumstances.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can generally choose whether to apply it. If it does choose the regime, FRS 105 is the standard that applies. Some companies deliberately use a different framework because of their structure, their transactions or the needs of lenders, investors or other users of the accounts, so the decision is worth thinking through rather than assuming.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 102 is the standard used by a much broader range of businesses and comes with more extensive measurement and disclosure requirements. FRS 105 is the micro-entities standard and is considerably simpler, with fewer disclosures and a more limited approach to measuring certain items — for example, the treatment of revaluations and deferred tax differs. Which one is appropriate depends on whether the company qualifies for and chooses the micro-entities regime.

The accounts themselves — whether prepared under FRS 105 or another framework — are normally filed with Companies House as part of the company's annual accounts filing obligation, with the filleted or full version depending on the exemptions the company is entitled to. That filing is entirely separate from your Corporation Tax obligations. Preparing the financial statements, filing them at Companies House and submitting a Corporation Tax Return to HMRC are three distinct steps that need to be handled correctly in their own right.

Yes, they are separate requirements. The FRS 105 financial statements are the company's statutory accounts, prepared under the financial reporting framework for qualifying micro-entities. A CT600 is the Corporation Tax Return submitted to HMRC, and it is calculated on tax rules rather than purely on accounting rules — so the taxable profit figure can differ from the accounting profit. Both matter, and both normally need to be dealt with for the same accounting period.

A newly incorporated company can potentially use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it. In practice, a first year of trading is often well suited to the regime because activity and balances tend to be modest — but qualification is not guaranteed simply because a company is new or small. It is worth checking the position before the first set of accounts is prepared, particularly if the company has group links, is involved in regulated activity, or has unusual transactions.

We normally need your records for the accounting period: bank and credit card statements, sales and purchase information, payroll and employee details, details of any assets bought or sold, loan and finance agreements, stock or work-in-progress figures where relevant, and the previous year's accounts. If you use accounting software, giving us access makes the process smoother. From there we can prepare financial statements that reflect the company's position and discuss the Companies House filing and Corporation Tax position separately.

Yes — the micro-entity size thresholds were updated, and for accounting periods beginning on or after 6 April 2025 the applicable conditions are turnover of no more than £1 million, a balance sheet total of no more than £500,000 and an average of no more than 10 employees, with at least 2 of the 3 generally needing to be met. Filing and reporting requirements in this area also continue to evolve, so it is worth reviewing your position each year rather than assuming last year's answer still applies.