FRS 105 Micro Entity Accounts in Berkhamsted

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is a simplified framework, so it removes a number of the accounting options and disclosures found in larger-company reporting. Under FRS 105, certain fair value adjustments and asset revaluations are generally not permitted, deferred tax is typically not recognised, and the notes to the accounts are considerably shorter. The result is a set of financial statements focused on the balance sheet and essential disclosures, which is usually quicker and less costly to prepare than accounts under FRS 102.

FRS 105 is intended for companies that both qualify as micro-entities and choose to apply the micro-entities regime. Qualifying means meeting the relevant size conditions and not falling within any of the rules or exclusions that prevent certain types of entity from using the regime — for example, entities with securities admitted to trading on a regulated market, and certain financial and insurance undertakings. Being small is necessary but not always sufficient, and there are additional restrictions that can apply depending on the company's structure and activities, so eligibility should be checked rather than assumed.

No. The micro-entities regime is an option, not an obligation. A qualifying company can choose to apply it and use FRS 105, or it can prepare its accounts under FRS 102 instead — the small companies regime with Section 1A disclosures is a common alternative. Some directors prefer the fuller reporting that FRS 102 provides, particularly if a lender, investor or purchaser is likely to want more detail. Others prefer the simplicity of FRS 105. It is worth making the decision consciously each year, because a change in circumstances can affect which framework is suitable.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least two of three 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. The test is two out of three, not all three. Meeting those size conditions is a starting point rather than the whole answer, because other rules and exclusions can affect whether the micro-entities regime is available, and thresholds are typically adjusted where an accounting period is longer or shorter than a year.

FRS 102 is the broader UK standard used by most small and medium-sized companies, while FRS 105 is the streamlined standard for micro-entities. FRS 105 is narrower in scope: it generally prohibits revaluing assets and using fair value measurements, typically does not recognise deferred tax, and requires far fewer disclosures. FRS 102 gives more accounting options and asks for more supporting information in the notes. In practical terms, FRS 105 accounts are shorter and simpler to prepare, while FRS 102 accounts can provide a richer picture for readers such as banks or prospective investors.

If the FRS 105 financial statements are your company's statutory accounts, they still need to be delivered to Companies House where the company is required to file accounts. Choosing the micro-entities regime changes how the accounts are prepared and what they contain — it does not remove the filing obligation. What appears on the public record can be more limited than the full set prepared for the members, and the rules on what small and micro companies file have been subject to reform, so it is worth confirming the current requirements for your period before you submit rather than relying on how it worked in previous years.

Yes, they are two different things. FRS 105 accounts are financial statements prepared under the micro-entities reporting framework and filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, which reports the company's taxable profits and calculates the tax due. The accounts usually form the starting point for the tax computation, but adjustments are often needed — for example for disallowable expenditure or capital allowances — so the taxable profit is not automatically the same as the profit in the accounts. The filings also go to different bodies and follow different timetables.

Companies House has been moving towards filing accounts through software rather than on paper or by manual web forms, and the amount of information small and micro companies must place on the public register is also being reshaped. Some of the flexibility around abbreviated filing is being reduced, which means the gap between the accounts you prepare for members and what you file may narrow. Implementation is being phased in, and the detail depends on legislation and current guidance, so it is sensible to review your filing approach with your accountant before each accounting period rather than assuming existing habits will continue to apply.