FRS 105 Micro Entity Accounts in Wirral

FRS 105 is a UK financial reporting standard that sets out how a qualifying company prepares its annual accounts when it chooses to apply the micro-entities regime. It is based on simple historical cost accounting and requires far less disclosure than the frameworks used by larger companies. In practice, that usually means shorter, more straightforward financial statements showing the balance sheet, a small number of notes and the information the law requires for a micro-entity. It applies only where the regime has been chosen; it is not a default position that applies to every company in the UK.

It is intended for companies that qualify as micro-entities and that decide to apply the micro-entities regime. Qualification is judged against the size criteria and is also subject to other rules and exclusions, which is why some companies that look small on paper still cannot use it. Companies that are part of an ineligible group, or that fall into certain categories excluded from the regime, will need to look at a different framework. Because eligibility depends on your own circumstances, it is worth having your position checked rather than assuming you qualify.

No. FRS 105 is an available accounting framework, not a mandatory one. A company that satisfies the eligibility conditions can choose to apply the micro-entities regime, and FRS 105 then governs how the accounts are prepared. If it does not choose that route, it will prepare accounts under a different framework, typically FRS 102, which offers more accounting options but also requires considerably more disclosure. The choice can affect how the accounts look, what is disclosed and how much work is involved, so it is usually worth considering the practical consequences before deciding.

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 during the period. Meeting those size tests is not the whole story, because other eligibility rules and exclusions can apply. A company could satisfy two of the three conditions and still be unable to use the regime. We look at the full picture, including the nature of the business and its group structure, before advising.

Both sit within UK GAAP, but they are aimed at different situations. FRS 105 is the micro-entities framework: historical cost only, minimal disclosure and a much simpler set of financial statements. FRS 102 is the standard used by many small and medium-sized companies that are outside the micro-entities regime, and it allows more accounting choices, such as certain fair value and revaluation treatments, while asking for more notes and explanations. FRS 102 also contains a reduced disclosure section for smaller companies, but it is still more detailed than FRS 105. Choosing between them is ultimately about which regime your company qualifies for and decides to adopt.

Most companies must file annual accounts with Companies House, and where the micro-entities regime is used, those accounts are the FRS 105 financial statements. There are limited exemptions from filing, but they do not apply to most trading limited companies, so filing is normally part of the annual cycle. Filing accounts is separate from settling your Corporation Tax position. Accounts are also provided to HMRC alongside the Corporation Tax return, in the required format and tagged appropriately, so the figures in both places need to be consistent and supportable.

Yes, they are two different things. The FRS 105 Micro Entity Accounts are your statutory financial statements, prepared under the accounting framework and filed at Companies House. The CT600 is a Corporation Tax return submitted to HMRC to report your company's tax position for the period, and it is accompanied by a tax computation and a copy of the accounts in the required format. The two are closely linked because the accounts figures normally feed into the tax computation, but they are not interchangeable and they have different purposes, deadlines and audiences. Keeping both on the same footing avoids confusing queries later.

We usually need your bookkeeping or accounting records for the period, bank statements, sales and purchase documentation, payroll and employee information, details of any assets bought or sold, loan and finance agreements, share capital details, and a copy of the previous year's accounts where one exists. Anything unusual during the year, such as a one-off transaction or a change in how the business operates, is worth flagging early. The cleaner and more complete the records, the more straightforward the preparation tends to be, which is why a short review of what you hold is often the most useful first step.

Companies House has been moving towards a more digital filing environment, with accounts increasingly expected to be submitted using approved software in a prescribed format rather than as a simple document upload. There have also been reforms affecting the filing options available to small companies. The detail and timing of these changes can shift, and the eligibility rules themselves are subject to review, so it is sensible to confirm the current position before you file rather than relying on how things were done a few years ago. We keep an eye on the practical implications for our Wirral clients and explain what it means for their accounts.