FRS 105 Micro Entity Accounts in Elstree

FRS 105 is the UK financial reporting standard that sets out how micro-entities prepare their annual financial statements. It sits within the UK's micro-entities regime and is designed to be proportionate for very small companies, allowing a more concise set of accounts with reduced disclosure compared with the fuller standards used by larger businesses. It covers the format and content of the primary statements — principally the balance sheet and profit and loss account — along with the limited notes that are required.

FRS 105 is available to companies that qualify as micro-entities and that choose to apply the micro-entities regime. Qualifying is about more than size alone: a company must meet the applicable size conditions and must not fall within any of the relevant exclusions, such as being an entity whose activities or status rule the regime out. Because those rules can be specific to your circumstances, eligibility is best confirmed by reviewing your company's position rather than by assuming that being small is enough.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies as a micro-entity can choose to apply it, and FRS 105 applies when that choice is made. A qualifying company could instead prepare its accounts under a different UK financial reporting standard, which would generally mean more extensive disclosures. The right answer depends on what the business needs from its accounts, who relies on them and whether simplified reporting is appropriate.

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 fall within the micro-entity thresholds: 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 conditions is not the whole picture, however — other eligibility rules and exclusions can apply, so the thresholds should be treated as one part of the assessment rather than a guarantee.

Both are UK financial reporting standards, but they are written for different sizes of entity. FRS 105 is the micro-entities standard and allows a notably shorter set of accounts with fewer disclosures. FRS 102 is the standard used more widely, including by small companies that do not qualify for, or do not choose, the micro-entities regime, and it generally requires fuller disclosure and more detailed accounting treatment — for example in areas such as financial instruments, provisions and deferred tax. Moving between the two can affect how figures are presented, so the choice is worth considering carefully.

Where a company prepares FRS 105 accounts for a financial year, those accounts form the basis of the annual accounts it is required to file at Companies House, subject to the filing requirements that apply to that company. Filing the accounts is a separate step from preparing them, and it is also separate from other submissions such as the Confirmation Statement. It is worth noting that the way accounts can be filed, and the formats accepted, are subject to change, so current Companies House guidance is always the best reference point.

Yes, they are separate. FRS 105 financial statements are the company's statutory accounts, prepared under the micro-entities regime and filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. The figures in the accounts usually inform the tax return, but they are different documents with different purposes, different deadlines and different audiences, and both need to be dealt with.

A newly incorporated company can apply FRS 105 for its first accounting period if it qualifies as a micro-entity and chooses to apply the regime. In practice, first-period accounts often involve additional considerations — for example, the length of the period, set-up costs and any share capital — and some of the size conditions are assessed on an annualised or pro-rated basis. It is worth reviewing the position early so the first set of accounts is prepared on the basis you intend to use going forward.

As a starting point, we would normally need your bookkeeping or accounting records for the period, bank statements and reconciliations, details of sales and purchases, payroll information if you employ staff, records of fixed assets and any additions or disposals, stock or work-in-progress figures where relevant, and details of loans, director's loan account movements and any other balances. Company details, the accounting period dates and confirmation of the reporting framework you intend to apply are also needed. The cleaner and more complete the records, the more straightforward the preparation tends to be.

The rules and practical arrangements around company accounts filing do evolve, and Companies House has been moving towards greater use of digital filing alongside wider reform of the company register. Because the detail can change and can depend on the type of company and the accounts concerned, the safest approach is to check the current Companies House guidance before you file, and to confirm that the format you plan to use is accepted. We keep an eye on developments so that accounts prepared for our clients reflect the position at the time.