FRS 105 Micro Entity Accounts in Canterbury

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how a qualifying micro-entity measures and presents the items in its annual accounts and what it must disclose alongside them. It is a deliberately streamlined framework based on historical cost, with limited use of fair value and revaluation and far fewer disclosure requirements than the standards used by larger companies. It applies when a company qualifies for the micro-entities regime and chooses to apply it.

FRS 105 is intended for companies that qualify for the UK micro-entities regime, have chosen to apply it, and are not excluded by any other rule. 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 the size conditions is not the whole test, as other eligibility rules and exclusions can apply, so your company's specific circumstances should be checked before the regime is adopted.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies as a micro-entity may choose to apply the regime, and FRS 105 is the standard that applies when that choice is made. A qualifying company could instead use another framework, such as FRS 102 or FRS 102 Section 1A where appropriate. The decision usually comes down to the complexity of the company's transactions, the information its shareholders or lenders want, and how much disclosure is sensible to provide.

FRS 102 is the broader UK financial reporting standard, and its Section 1A sets out the reduced disclosure options available to small companies. FRS 105 is narrower and simpler still: it applies only to companies using the micro-entities regime and it strips back measurement choices and disclosures further. Under FRS 105, for example, financial instruments and other items are generally kept at historical cost with very limited exceptions, revaluation and fair value accounting are largely unavailable, and the note disclosures are minimal. The trade-off is that FRS 105 accounts are quicker and cheaper to produce, but they offer less flexibility if your business has more complex arrangements.

Yes, in the same way that any limited company must deliver annual accounts to Companies House, a company using the micro-entities regime has filing obligations for its accounts. The accounts prepared under FRS 105 form the basis of the statutory financial statements, and a micro-entity may be able to file a simplified version of the balance sheet and notes. What can be filed, and in what format, depends on the current filing rules and on the company's own circumstances, so it is worth confirming the position for your accounting period rather than assuming the same approach applies year after year.

Yes, they are two distinct filings. FRS 105 Micro Entity Accounts are your statutory financial statements, prepared under the micro-entities regime and delivered to Companies House as part of your annual accounts filing. A CT600 is a Corporation Tax Return submitted separately to HMRC, and it is based on your accounts but adjusted for tax purposes, for example for disallowable expenses or capital allowances. Your accounts do not replace a Corporation Tax Return, and filing your accounts does not settle your Corporation Tax obligations.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime, chooses to apply it, and is not caught by any exclusion. In practice, many small companies in their early years meet the size conditions comfortably, but eligibility still needs to be considered properly rather than assumed, and a first accounting period can raise questions about what the figures should cover. It is also worth thinking about how your business is likely to grow, because adopting the micro-entities regime is a choice you can review as circumstances change, and moving between frameworks later has practical consequences for comparatives.

Preparation starts with complete and up-to-date records. Useful information includes bank and cash statements, sales invoices and receipts, purchase invoices and expense records, payroll and pension information, details of any loans or finance agreements, fixed asset additions and disposals, and stock or work in progress figures where relevant. It also helps to have your company details, the accounting period covered, details of share capital and any dividends, and the previous year's accounts if you have them. The more organised your records, the smoother the preparation process tends to be.

Companies House has been changing what it accepts for accounts filing, including a move towards filing through compatible software and changes to the use of abridged and filleted accounts. Because the detail and the timing of these changes depend on the current rules, and because they can affect what a micro-entity submits, it is best to check the latest position before your next filing rather than relying on how things were done previously. We can talk you through how the current requirements apply to your company's accounts.