FRS 105 Micro Entity Accounts in Lancaster

FRS 105 is the UK financial reporting standard that applies to the accounts of companies using the micro-entities regime. It provides a simplified framework for preparing annual financial statements, with a reduced level of disclosure compared with the standards used by larger companies. In practice it means a shorter, more straightforward set of accounts — typically a simplified balance sheet, a profit and loss account and a limited number of notes — that still reflects the company's financial position. FRS 105 is a reporting framework for the accounts themselves and does not cover Corporation Tax calculations or other company filings.

FRS 105 Micro Entity Accounts are available to companies that qualify for the UK micro-entities regime and 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 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. Meeting the size conditions is not the whole picture — there are additional eligibility rules and exclusions, and some companies are excluded from the regime regardless of their size. Qualifying is also a choice: an eligible company can decide to use FRS 105 or to report under a different framework.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that meets the eligibility conditions can choose to apply the micro-entities regime and therefore prepare its accounts under FRS 105, or it can decide to report under another framework such as FRS 102. The right choice depends on the company's circumstances, what its directors and any lenders or investors need from the accounts, and whether the reduced disclosure of FRS 105 suits the business. Because the decision affects how the accounts look, it is worth reviewing it rather than assuming the default.

Both are UK financial reporting standards, but they are aimed at different sizes of company and produce different accounts. FRS 105 is the micro-entities standard and is deliberately simpler, with far fewer disclosure requirements and a more limited measurement basis — for example, it does not permit the revaluation or fair value accounting options that FRS 102 allows. FRS 102 is the standard used by larger small companies and others, and it gives more flexibility in how certain items are measured and considerably more disclosure. In short, FRS 105 trades some flexibility and detail for simplicity, which suits many micro-entity owner-managers but not every business.

Yes. Annual accounts prepared under FRS 105 are still annual accounts, and a company that is required to file accounts with Companies House must do so. Applying the micro-entities regime changes how those accounts are prepared and how much is disclosed, not whether they need to be filed. Filing the accounts is one obligation; submitting a Corporation Tax Return (CT600) to HMRC is a separate one, based on different rules and with its own deadline. A Confirmation Statement is a third, separate Companies House filing that confirms company information rather than reporting financial results.

It is. FRS 105 accounts are the company's financial statements, prepared under the micro-entities regime and filed with Companies House. The CT600 is the Corporation Tax Return submitted to HMRC, and it is calculated on its own basis, which may differ from the figures in the accounts — for example through tax adjustments, capital allowances and the treatment of certain expenses. The two documents draw on the same underlying records but serve different purposes and go to different authorities, so preparing one does not automatically take care of the other.

A newly incorporated company can potentially use FRS 105 Micro Entity Accounts, but it is not automatic. Eligibility is assessed against the micro-entity conditions and the wider rules and exclusions, and a company in its first accounting period generally looks at its position on the balance sheet date or, depending on the circumstances, an annualised or pro-rated view of turnover. Because a first set of accounts can raise questions about how the period should be treated, it is worth discussing the position with an accountant early rather than assuming the regime applies. New companies also have different filing deadlines for their first accounts, so checking the specific position for your company matters.

To prepare FRS 105 Micro Entity Accounts, we typically need your bookkeeping or accounting records for the period, bank statements and reconciliations, sales and purchase records, payroll details if you employ staff, details of any assets bought or sold, information on loans, hire purchase or finance agreements, and the movement on director's loan accounts. Details of stock, work in progress and any accruals or prepayments help too. If your records are not fully up to date, we can discuss what needs to be put in order first. The clearer the information you provide, the more straightforward the preparation of the accounts tends to be.

Filing requirements for small and micro-entity accounts at Companies House are in the process of being updated, with a general shift towards accounts being filed in a software format and changes affecting the level of detail included in filed accounts. This means practices that were accepted in previous years may not be suitable going forward, and it is worth checking the current guidance rather than relying on how your accounts were filed historically. Because the detail and timing of these changes can be updated, we recommend reviewing your filing approach each year and raising any questions before your accounts are due.