FRS 105 Micro Entity Accounts in Brighton And Hove

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how the smallest qualifying companies prepare their annual financial statements, using a simplified measurement basis and a reduced set of disclosures compared with larger reporting frameworks. In practice, it governs how items are recognised and measured and what must appear in the profit and loss account, the balance sheet and the accompanying notes. FRS 105 applies when a qualifying company chooses the micro-entities regime — it is a reporting framework, not a tax return or a registration.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide to apply it. Qualification depends on meeting the applicable size conditions — for accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3: 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. Other eligibility rules and exclusions can apply, and certain companies are not able to use the regime at all, so meeting the size tests alone does not automatically mean a company qualifies. It is worth checking your specific position before the accounts are prepared.

No. The micro-entities regime is an available accounting regime for companies that qualify, not a mandatory one. A company that meets the size conditions may choose to apply it, and FRS 105 applies when that choice is made. Qualifying companies can instead prepare their financial statements under a different framework, such as FRS 102, which involves more detailed measurement and disclosure requirements. Some companies voluntarily move away from the micro-entities regime because of the way particular transactions, arrangements or stakeholder expectations need to be presented.

FRS 102 is the broader UK and Ireland financial reporting standard used by a wide range of companies, while FRS 105 is the more streamlined standard for companies applying the micro-entities regime. FRS 105 generally involves simpler measurement and fewer disclosures, which suits the scale of a very small company. FRS 102 covers more complex areas in greater depth and requires more extensive notes, which can be more appropriate where a company has particular transactions or obligations to reflect. Which standard is suitable depends on the company's circumstances, not simply on its size.

Where a company is required to file annual accounts, those accounts are submitted to Companies House, and that applies to FRS 105 Micro Entity Accounts as much as to any other framework. Micro-entity accounts can be prepared on a simpler basis, and the framework allows for a reduced set of disclosures and, in certain cases, a reduced balance sheet format. The accounts are separate from a Company Tax Return and from a Confirmation Statement, which are different filings with different purposes. Filing requirements and available exemptions depend on your company's specific situation.

Yes, they are separate. The FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities reporting framework and filed with Companies House where required. The Company Tax Return (CT600) is a Corporation Tax filing made to HMRC, and it deals with the company's tax position rather than its financial reporting presentation. The figures used in the two should be consistent and derived from the same underlying records, but they are distinct documents, follow different rules and are submitted to different bodies.

A newly incorporated company can potentially apply the micro-entities regime if it meets the relevant eligibility conditions and chooses to do so. In the first period, the size conditions are generally assessed on the basis set out in the applicable rules, and a company that expects to be small may well fall within the regime. However, exclusions and other eligibility rules still apply, and a company cannot assume it qualifies simply because it is new or small. Reviewing the position before the first set of accounts is prepared is a sensible step.

Preparation normally starts with complete and accurate records for the period: sales and purchase information, bank and cash records, payroll details, expense receipts, details of any assets acquired or disposed of, loan and lease agreements, and stock or work-in-progress information where relevant. Details of any share capital, dividends and director's loan movements are also helpful. The clearer and more up to date your records are, the more efficient the process tends to be, and the easier it is to answer questions that arise while the accounts are being drawn up.

The UK is moving towards filing accounts in a structured digital format, which affects how accounts are submitted rather than the underlying reporting framework itself. Companies filing under the micro-entities regime, including those preparing FRS 105 Micro Entity Accounts, should expect the way accounts are delivered to Companies House to evolve, with software-based filing becoming more central. The eligibility conditions for the regime were also updated for accounting periods beginning on or after 6 April 2025. Because the detail matters, it is worth checking the current position for your own company rather than relying on older guidance.