FRS 105 Micro Entity Accounts in Pontnewynydd

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is part of the same suite of standards as FRS 102 but is much shorter, with simplified recognition and measurement rules and significantly reduced disclosure requirements. FRS 105 governs how a qualifying micro-entity's annual financial statements are prepared — it is not a tax return and it is not a Companies House form; it is the accounting framework behind the accounts themselves.

FRS 105 is available to companies that qualify for the micro-entities regime and then 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, though — other eligibility rules and exclusions can apply, and some types of company cannot use the regime at all.

No. The micro-entities regime is an available accounting regime that qualifying companies may choose to adopt, rather than a mandatory one. An eligible company can instead prepare its accounts under a different framework, such as FRS 102 (including the reduced disclosure options available under FRS 102 Section 1A). The choice often comes down to who uses the accounts, whether a lender or investor expects a particular level of disclosure, whether the company is part of a group, and whether flexibility such as revaluation or fair value measurement would be useful.

Both are UK financial reporting standards, but FRS 105 is the simplified framework for micro-entities while FRS 102 is the fuller standard used by a much wider range of companies. FRS 105 removes many of the accounting policy choices and measurement options found in FRS 102 — for example, revaluation of fixed assets and fair value accounting for investment property are not available — and it requires far fewer notes to the accounts. FRS 102 gives more flexibility and much richer disclosure, which is why some small companies in Pontnewynydd prefer it even when they could use the micro-entities regime.

If your company is required to file annual accounts, then yes — the financial statements prepared under FRS 105 are the accounts that get filed, and micro-entity accounts can be delivered in a simplified format. Filing accounts at Companies House is a separate exercise from sending a Company Tax Return to HMRC, and separate again from a Confirmation Statement. Even where the accounts contain relatively little detail, they must still be prepared accurately and consistently, so it is worth getting the underlying figures right before filing.

Yes — they are two distinct obligations. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under the micro-entities regime. A CT600 is the Corporation Tax Return submitted to HMRC, which starts from the company's profit figure but then applies tax-specific adjustments such as disallowable expenses, capital allowances and losses brought forward. The two documents usually need to be consistent with each other, but they serve different purposes, go to different bodies, and have their own separate requirements and deadlines.

A newly incorporated company can use FRS 105 for its first set of accounts if it meets the applicable eligibility conditions for that period and is not excluded from the micro-entities regime. It is worth remembering that a first accounting period is often longer or shorter than twelve months, which can affect how the size conditions are assessed. We would look at your particular incorporation date, period length and expected activity before confirming how the regime applies to you.

In practice we need a clear record of what the company has done during the period: bank statements and reconciliations, sales and purchase records, payroll information, details of assets bought or sold, stock or work in progress where relevant, loan balances, share capital details, director's loan movements, and the previous year's accounts if there are any. Where a company is newly formed, we also need the incorporation details and any opening balances. The cleaner and more complete your records, the more efficiently the FRS 105 financial statements can be prepared — and the fewer questions we need to come back to you with.

Companies House has been introducing changes under the Economic Crime and Corporate Transparency Act 2023, and further reforms to the accounts filing framework are planned, including a move towards filing profit and loss information for smaller companies and greater use of software-based filing. Because implementation dates and detailed requirements are set out in official guidance and can be updated, it is sensible to check the current position rather than rely on older summaries. If you are unsure how any upcoming change affects your FRS 105 Micro Entity Accounts, we can talk it through with you.