FRS 105 Micro Entity Accounts in Balsall Common

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how the smallest qualifying companies prepare their annual financial statements, using a simplified approach: assets are generally held at historical cost rather than revalued or measured at fair value, deferred tax is not recognised, and the disclosure requirements are considerably lighter than those of fuller reporting frameworks. It is a reporting standard, not a tax regime — it governs how the accounts are presented, not how much Corporation Tax is payable.

FRS 105 is available to companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying is about more than size alone, so meeting the relevant thresholds does not automatically mean a company is eligible — other rules and exclusions can apply, for example where a company sits within a group or operates in a regulated sector. The practical first step is to check your company's specific position rather than assume you are in or out.

No. The micro-entities regime is an available accounting regime for qualifying companies, not a mandatory one. If your company qualifies, you can choose whether to apply the micro-entities regime and therefore FRS 105, or to prepare accounts under a fuller framework such as FRS 102. The choice often comes down to who uses the accounts — a lender or investor may prefer the more detailed picture that a fuller framework provides — so it is worth thinking about that before deciding.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 3 applicable size conditions to qualify as a micro-entity: 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 during the period. These are size conditions rather than a complete definition of eligibility. Other rules and exclusions can affect whether a company qualifies, and the assessment is made against the relevant period, so it is worth confirming your position before committing to the regime.

FRS 102 is a fuller reporting framework used by a much wider range of companies, including many small and medium-sized businesses. FRS 105 is a stripped-back standard, so the main differences show up in three areas: measurement, where FRS 105 sticks to historical cost while FRS 102 permits revaluation of certain assets and fair value measurement in specified circumstances; deferred tax, which FRS 105 does not recognise but FRS 102 does; and disclosure, where FRS 105 requires far fewer notes. In short, FRS 105 gives a simpler but less detailed set of accounts.

Yes, where accounts are required to be filed, they are submitted to Companies House in line with the company's statutory filing obligations, and FRS 105 can be a valid basis for those accounts if the micro-entities regime applies to your company. Filing the accounts is a separate action from preparing them, and it is also separate from anything you send to HMRC. Because the format and the level of detail required for filing do not always match the full accounts prepared for the company's own records, it is worth keeping the two in step.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and filed as accounts. A CT600 is the Corporation Tax Return submitted to HMRC, and it is based on the company's taxable profits, which are arrived at using tax rules rather than accounting rules. The starting point is usually the profit in the accounts, but adjustments are commonly needed, so the figures in the accounts and the figures on the CT600 will not necessarily be the same.

A newly incorporated company can apply the micro-entities regime in its first accounting period if it qualifies, and first-year accounts are often the simplest place to start because there is less history to consider. That said, new companies can be unusual — there may be start-up costs, a period of low or no turnover, or a long first accounting period — so it is worth checking the position rather than assuming the regime will apply automatically. It is also sensible to think ahead: a company that expects to grow or take on investment may find a fuller framework more useful from the outset.

In practice, we need a complete and consistent record of your transactions for the accounting period. That typically means bank and credit card statements, sales and purchase records, payroll information, details of any assets bought or sold, and any loan or finance agreements. It also helps to know your accounting period dates, whether the company has filed accounts previously, and whether there are any unusual items such as director's loans or one-off transactions. If you use accounting software, giving us access is often the quickest route to an accurate set of figures.

Company filing requirements in the UK have been evolving, with a broad direction of travel towards fuller disclosure of financial information at Companies House and a greater reliance on software-based filing. The detail and the timing of these changes continue to develop, and they can affect what a micro-entity is expected to file as well as how it is submitted. Rather than rely on second-hand summaries, it is worth checking the current position with us before your next set of FRS 105 Micro Entity Accounts is prepared.