FRS 105 Micro Entity Accounts in Prescot

FRS 105 is the UK financial reporting standard that applies to micro-entities. It sets out simplified recognition, measurement and disclosure requirements, so qualifying companies can prepare statutory financial statements that are proportionate to their size. FRS 105 applies when a company qualifies for the micro-entities regime and chooses to use it. Because the rules are pared back — assets are generally held at cost, deferred tax is not recognised and the notes are kept short — the accounts are easier to prepare and simpler for readers to follow, while still giving a clear view of the company's financial position and performance.

FRS 105 is available to companies that qualify as micro-entities under the UK micro-entities regime and that choose to apply it. Qualification depends on meeting the applicable size conditions and not falling within any of the exclusions that take certain types of company outside the regime. Companies that qualify are not obliged to use FRS 105 — it is one option, and another framework such as FRS 102 may be more suitable depending on the business, its transactions and who relies on the accounts. Because several rules and exclusions can affect the outcome, eligibility is best confirmed by reviewing your company's specific position rather than assuming it from turnover or headcount alone.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may choose to apply it, and FRS 105 is the standard that applies when that choice is made. Some qualifying companies prefer a different framework because of the transactions they have, the way they are financed, or because a lender or investor expects a fuller set of disclosures. Others find the simplified approach of FRS 105 a good fit. The decision should be made deliberately for each accounting period, since circumstances and eligibility can change from one year to the next.

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: 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 only part of the picture — other eligibility rules and exclusions can apply, and periods that are not a standard 12 months are treated differently. If your company is close to a threshold, or has an unusual period or structure, it is worth checking the position properly before deciding which framework to use for your FRS 105 Micro Entity Accounts.

Both are UK financial reporting standards, but they are designed for different sizes of company. FRS 102 is the fuller framework, and for smaller companies it is often used in its reduced-disclosure form. It permits or requires more detailed measurement and disclosure, including options such as revaluation of certain assets, fair value accounting in specified cases and recognition of deferred tax. FRS 105 is deliberately narrower: it applies only to qualifying micro-entities that choose the micro-entities regime, and it strips out those options in favour of a simpler, cost-based approach with far fewer notes. In short, FRS 105 is the most streamlined route, while FRS 102 gives more flexibility and more disclosure.

Where a company is required to file statutory accounts, micro-entity accounts are filed with Companies House in the required format, and FRS 105 accounts are prepared on that basis. The filing is made from the company's statutory financial statements, so the figures filed should match the accounts that have been prepared and, where relevant, approved by the directors. Filing deadlines depend on the company's own circumstances, such as whether it is filing its first accounts or a set for a later period, so directors should always check the specific deadline that applies to them rather than relying on a general rule of thumb.

Yes, they are two separate things. FRS 105 Micro Entity Accounts are statutory financial statements prepared under the UK accounting framework and filed, where required, with Companies House. A Corporation Tax Return (CT600) is a tax filing submitted to HMRC and is calculated under tax rules rather than accounting rules, even though a tax computation usually starts from the figures in the accounts. Adjustments such as disallowable expenses, capital allowances and timing differences mean the taxable profit can differ from the accounting profit, so the two documents should never be treated as interchangeable.

Possibly, but not automatically. A newly incorporated limited company is not automatically a micro-entity simply because it is small at the outset. It would need to meet the relevant size conditions for the period in question, avoid the applicable exclusions, and choose to apply the micro-entities regime. New companies often have low turnover and few employees, which can make qualification likely, but a first accounting period that covers more than 12 months adds its own considerations. It is also worth planning ahead, since the framework chosen for the first set of accounts tends to shape what lenders, HMRC correspondence and future filings expect to see.