FRS 105 Micro Entity Accounts in Dinnington: Reporting Made Straightforward for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that underpins the micro-entities regime. It is a deliberately simplified framework: assets are measured on a straightforward basis rather than at fair value, revaluations and certain complex accounting treatments are not permitted, and the number of disclosure notes is kept low. The aim is to give very small companies a shorter, cheaper set of financial statements that still show a true picture of their assets, liabilities and trading results. It is a different standard from FRS 102, which is used by larger small companies and by entities that do not qualify for, or do not choose, the micro-entities regime.

FRS 105 is available to companies that qualify for the micro-entities regime and then choose to apply it. Qualification is based on size, but size is not the only test — certain rules and exclusions can prevent a company from being treated as a micro-entity even where its figures look small. Companies that qualify are not obliged to use the regime; they can instead prepare accounts under FRS 102, including the small entities provisions. Because the decision affects how the accounts are presented, it is worth reviewing your position each year rather than assuming the previous approach still fits.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that meets the size conditions may elect to apply it and prepare FRS 105 Micro Entity Accounts, or it may choose to report under FRS 102 instead. Larger or more complex companies sometimes prefer FRS 102 because it allows revaluations, fair value measurement and a longer set of disclosures that lenders or investors have asked for. If a company does not meet the conditions, the micro-entities regime is not open to it and a different framework has to be used.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable 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 during the period. Meeting those size conditions is a starting point rather than a guarantee. Other eligibility rules and exclusions apply, and some companies are excluded from the regime regardless of their size, so each company's circumstances need to be checked individually.

The main difference is scale and flexibility. FRS 105 is the micro-entities standard: very short accounts, minimal notes, and measurement at cost with no revaluations, no fair value accounting and no deferred tax. FRS 102 is a fuller framework used by small and larger entities. It gives more choice over accounting policies, permits fair value and revaluation in certain cases, and requires a broader set of disclosures — for example on accounting policies, commitments and related party transactions. In exchange for that flexibility, FRS 102 accounts take longer to prepare and are more expensive to produce.

Yes. Where a company prepares FRS 105 Micro Entity Accounts for a financial year, those accounts are filed at Companies House as the company's annual accounts, within the statutory filing deadline that applies to that company. Filing is separate from anything owed to HMRC. The accounts are also approved and signed by the director, and the company must keep a copy in its records. Companies House will accept filings that meet its requirements, but it does not review or approve the accounting judgements behind them, so the accuracy of the accounts rests with the company and whoever prepares them.

Yes, they are two distinct things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report taxable profits and calculate the tax due, and it is accompanied by a computation that starts from the accounting profit and adjusts it for tax purposes. The two documents are connected because they use the same underlying figures, but they are prepared for different bodies and can legitimately differ — for example where tax allowances or disallowable expenses create a gap between accounting profit and taxable profit.

A newly incorporated company can use FRS 105 in its first accounting period if it qualifies for the micro-entities regime and chooses to apply it. In practice, a first-year company usually has modest turnover, a small balance sheet and few or no employees, so the size conditions are often met — but other eligibility rules still have to be considered, and the position should be reviewed as the company grows. If turnover rises above the applicable threshold, or the balance sheet grows, the company may need to move to FRS 102 in a later period, so it is worth planning for that possibility from the outset.

Companies House has been moving towards fuller, digital filing of accounts as part of wider company law reform, with software-based filing becoming the expected route and a reduction in the ability to file heavily abbreviated information. Because the detail and the timing of these changes are set by legislation and by Companies House, the practical impact depends on your company's year end and its circumstances. If you prepare FRS 105 Micro Entity Accounts, it is sensible to check the current position each year rather than relying on how filings were made previously, so the accounts you submit meet the requirements in force at the time.