FRS 105 Micro Entity Accounts in Broxburn — Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is the simplest of the UK accounting frameworks and is designed to reduce the reporting burden on the smallest companies. Accounts prepared under FRS 105 are based on the company's own financial records and follow the recognition and measurement rules in the standard, with a reduced set of disclosures compared with other frameworks. It governs how the accounts are prepared and presented — not how much tax the company pays.

FRS 105 is available to companies that qualify for the UK micro-entities regime and that choose to apply it. In practice that usually means small private limited companies that meet the relevant size conditions and are not caught by an exclusion. Qualifying is only part of the picture, because applying the regime is a decision: a company that qualifies could instead prepare accounts under FRS 102, including Section 1A for small entities. The right choice depends on the company's size, structure, ownership and what the directors need from the accounts.

No. Qualifying for the micro-entities regime does not force a company to use it, and not every small company automatically falls within the regime. FRS 105 applies when the company chooses to apply the micro-entities regime for the financial year in question. A qualifying company might still prefer FRS 102 — for example where a lender, investor or parent company expects fuller disclosures, or where the directors want a more detailed set of accounts. Once the micro-entities regime is chosen for a period, the accounts for that period are prepared in line with FRS 105.

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 two of the three is not the whole test, as other rules and exclusions can affect whether a company qualifies. Thresholds and rules can change, and companies operating close to the limits may move into or out of the regime from one financial year to the next, so eligibility should always be checked against the rules in force for your period.

FRS 102 is the main UK financial reporting standard and applies to a far wider range of companies, including small companies using Section 1A. FRS 105 sits at the simplest end of the spectrum: it is open only to qualifying micro-entities that choose the regime, and it involves fewer recognition, measurement and disclosure requirements. In practical terms, FRS 105 accounts are shorter and more streamlined, while FRS 102 accounts give a fuller picture. Switching frameworks can affect how certain items are treated in the accounts, so the choice is worth discussing before it is made.

Yes. If your company is required to file annual accounts, preparing them under FRS 105 does not remove that requirement — it simply determines the framework used. Micro-entity accounts are filed at Companies House in the usual way. Under current filing rules, the accounts filed for a micro-entity typically do not include the profit and loss account, even though the company still prepares one for its own records and for tax purposes. It is worth understanding the difference between what is filed publicly and what is kept internally.

Yes, they are two different documents. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities regime and filed at Companies House. A CT600 is a Corporation Tax Return submitted separately to HMRC. The figures in the accounts usually feed into the tax return, so it makes sense to prepare them together and keep them consistent, but they serve different purposes, follow different submission routes and have their own deadlines. A Confirmation Statement is a third, separate filing.

A newly incorporated company can use FRS 105 for its first accounts if it qualifies as a micro-entity and chooses the regime. Eligibility is assessed against the size conditions and the other rules that apply to the company rather than the age of the business, so a first-year company can qualify. New companies do need to think about their first accounting period, which may be longer than 12 months, and about the records they hold. Where rapid growth or external funding is expected, FRS 102 may be the more practical choice from the outset.