FRS 105 Micro Entity Accounts in Thame

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the recognition, measurement and disclosure rules that apply when a qualifying company chooses to prepare its annual accounts under the micro-entities regime. It is deliberately simplified compared with FRS 102: it is based largely on historical cost, allows only very limited adjustments to that principle, and requires far fewer notes and disclosures. The result is a shorter, more proportionate set of statutory accounts for very small companies.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide 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 those size conditions is not on its own a guarantee of eligibility — other rules and exclusions can apply, including where the company forms part of a group or falls into a category that cannot use the regime. The regime is also optional, so eligibility and suitability are two separate questions.

No. The micro-entities regime is an available accounting framework, not a mandatory one. A company that qualifies as a micro-entity can choose instead to prepare its accounts under another framework, such as FRS 102, including the small companies provisions where relevant. Many qualifying companies find FRS 105 attractive because it reduces the disclosure burden, but the choice depends on the company's circumstances, its plans and what the directors need from the accounts — for example, if a lender or investor expects a fuller set of information.

Both are UK financial reporting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: it is shorter, generally uses historical cost, permits very limited departures from that, and requires minimal disclosure. FRS 102 is the wider standard used by small, medium and larger entities, with more detailed recognition and measurement requirements — including options such as revaluation and fair value accounting that FRS 105 does not generally offer — and a much broader set of disclosures. In practice, the choice affects both how figures are measured and how much detail appears in the notes.

Yes. If a company prepares its statutory accounts under FRS 105, those accounts still need to be filed with Companies House in the usual way — the micro-entities regime simplifies how the accounts are prepared, not whether they are filed. Micro-entity accounts can generally be filed in a simplified format, and the directors remain responsible for approving the accounts before they are submitted. Filing arrangements and requirements do vary depending on the company and the period, so it is worth checking the current position for your specific filing rather than assuming one approach fits every company.

Yes, they are separate exercises. FRS 105 accounts are the company's statutory financial statements, prepared for the members and filed at Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, and it follows tax rules rather than accounting rules — items such as disallowable expenditure, capital allowances and losses brought forward are dealt with in the tax computation. The profit figure in the accounts is usually the starting point for that computation, but the two documents serve different purposes, go to different organisations and are subject to different deadlines.

Potentially, yes. A newly incorporated company can use the micro-entities regime for its first accounting period if it qualifies as a micro-entity and the directors choose to apply it. In the first period, eligibility is generally assessed by reference to that period rather than an earlier one, which can work in favour of a company that is still finding its feet. That said, a new company's circumstances can change quickly — a large one-off contract, a significant asset purchase or additional staff can all affect the position — so it is worth confirming eligibility before the accounts are prepared rather than assuming it applies.

Company filing requirements are being updated as part of wider company law reforms, with a move towards filing accounts through software rather than by other routes, and an expectation that small and micro-entity accounts will include a profit and loss account rather than only a balance sheet. The detail and the timing of these changes have been subject to consultation and may be refined, so the practical answer is to check the current guidance at the time you file, or ask us to confirm the position for your company. Preparing records in a format that can feed into software filing will make the transition easier whenever the changes take effect for your accounts.