FRS 105 Micro Entity Accounts in Brimstage

FRS 105 is the UK financial reporting standard that applies to companies preparing accounts under the micro-entities regime. It sets out a simplified basis of preparation: a short balance sheet and profit and loss account, a reduced set of notes, and generally a historical cost approach. It exists so that the smallest qualifying companies can report their results without the heavier presentation and disclosure requirements of a fuller framework such as FRS 102.

FRS 105 is available to companies that qualify for the micro-entities regime and then choose to apply it. Qualifying depends on meeting the applicable size conditions and on not falling within any of the relevant exclusions. Some types of entity, and some companies that sit within a larger group or that carry on particular activities, may not be eligible even if they look small on paper. Because eligibility turns on the specific rules rather than on size alone, it is worth checking your position before assuming FRS 105 applies to you.

No. Qualifying for the micro-entities regime does not force you to use it. The regime is an available option for companies that meet the criteria, and FRS 105 is the standard that applies when that option is taken. A qualifying company may instead prepare its accounts under FRS 102, or another appropriate framework, depending on its circumstances and the needs of its shareholders and lenders. The decision is usually worth revisiting each year, because changes in turnover, balance sheet total or employee numbers can affect what is available.

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 the size conditions is only part of the picture, however. Other eligibility rules and exclusions can apply, and qualifying is not the same as being required to use the regime. If your figures sit near any of those limits, it is worth reviewing the position carefully.

FRS 102 is the general UK financial reporting standard and applies far more widely, including to small companies that do not use the micro-entities regime. FRS 105 is the narrower, simplified standard for qualifying micro-entities. In practice the differences show up in presentation and disclosure: FRS 105 accounts are shorter, need fewer notes, and avoid many of the fair value and measurement options found under FRS 102. FRS 102 gives a fuller picture and more flexibility, but it also asks for more work. Which one suits a company depends on eligibility and on what the users of the accounts need.

Accounts prepared under FRS 105 still form part of a company's statutory accounts, so for a company that is required to file accounts, they are filed with Companies House in the usual way — just under the micro-entity regime. The filing obligation comes from company law rather than from FRS 105 itself, and the format and content of what is delivered follow the rules that apply to micro-entity accounts. Filing the accounts is separate from any Corporation Tax filing or Confirmation Statement you may also need to submit.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities regime and, where required, filed with Companies House. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and work out the tax due. The figures in your accounts normally feed into the tax computation, but the accounts do not replace the return, and HMRC does not review or approve your accounts as part of the CT600 process.

Typically you will need complete bookkeeping records for the period, bank and credit card statements, sales and purchase records, payroll information, details of any assets bought or sold, stock or work in progress figures where relevant, loan and lease agreements, and the previous year's accounts so opening balances can be agreed. If a director has loaned money to the company or drawn from it, those movements need to be clear too. The more complete and reconciled the records are, the more straightforward the preparation becomes.

A newly incorporated company may be able to use FRS 105 for its first accounting period if it qualifies for the micro-entities regime and chooses to apply it. In practice, a first-year company often has modest turnover and few employees, so it may well fall within the size conditions — but eligibility still depends on the full set of rules and exclusions, not just on the size tests. It is also worth planning ahead, because a company that grows may need to move to a different framework in a later period.