FRS 105 Micro Entity Accounts in Blackfoot — Straightforward Financial Reporting for Qualifying Companies

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how those companies recognise and measure their assets, liabilities, income and expenses, and what they need to disclose in their financial statements. It is deliberately streamlined compared with the frameworks used by larger companies: there are fewer disclosure requirements, and measurements such as fair value and revaluation are generally not permitted, so the balance sheet stays on a largely historical-cost basis. In practice, FRS 105 accounts give a concise but complete picture of a company's financial position at the period end and its performance over the period.

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 those size conditions is not the whole story, because other eligibility rules and exclusions can apply depending on the company's structure and activities, and the size conditions themselves need to be measured correctly for the period in question. That is why eligibility is worth confirming rather than assuming.

No. Qualifying for the micro-entities regime does not force a company to use FRS 105 — it makes the regime available, and the company then decides whether to apply it. Many qualifying companies do choose FRS 105 because it is simpler, but others prefer FRS 102, for example where a lender, investor or other user of the accounts needs a more detailed picture, or where the company wants to use accounting treatments that FRS 105 does not permit. The important point is that the choice belongs to the company, and it should be made with a clear understanding of the consequences.

Both are part of UK GAAP, but they sit at different levels of complexity. FRS 105 is designed specifically for the micro-entities regime and is the most simplified framework, with a short set of disclosures and restrictions that keep the accounts close to a historical-cost view. FRS 102 is the wider standard, and its small-company section is used by companies that do not qualify for, or do not choose, the micro-entities regime. FRS 102 generally allows more accounting options and requires more disclosure. A company that is eligible for both will often weigh up the needs of the people who read its accounts — banks, landlords, investors or family shareholders — before deciding which framework to use.

Yes — where a company is required to file annual accounts, the statutory accounts prepared under FRS 105 are what get filed with Companies House. Micro-entity accounts can be filed in a simplified format, and the filing deadline depends on factors such as whether it is your first set of accounts and how you choose to file. Approval by the directors is part of the process, as the accounts must be signed off before they are submitted. Filing the accounts with Companies House is a separate action from submitting a Company Tax Return to HMRC, and the deadlines for each are calculated differently, so it is worth diarising both.

Yes, they are two distinct things. FRS 105 accounts are financial statements prepared under an accounting framework for the benefit of shareholders and, in filed form, Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, which calculates tax on the rules set out in tax legislation rather than on accounting standards. The tax computation usually starts from the accounting profit shown in the accounts, but adjustments are then made for items treated differently for tax — for example, depreciation and capital allowances, or disallowable expenses. Preparing FRS 105 Micro Entity Accounts does not by itself settle your Corporation Tax position.

A newly incorporated company can potentially use FRS 105 for its first set of accounts, provided it qualifies for the micro-entities regime and chooses to apply it. The way the size conditions are assessed can differ where a company has no prior accounting period to compare against, and the usual exclusions still need to be considered. Because the answer depends on your company's specific circumstances — what it does, how it is structured and what its first period looks like — it is sensible to confirm eligibility before the accounts are prepared rather than after.

The rules around company filing have been under reform in recent years, with the direction of travel being towards more detailed information being placed on the public register, including profit and loss information for small and micro-entity companies. These changes are being introduced in stages, and the practical effect on any individual company depends on its period end and the latest requirements in force at the time. Rather than rely on how things worked a few years ago, it is worth checking the current position with Companies House guidance, or asking us to confirm what applies to your filing before you submit.