FRS 105 Micro Entity Accounts in Cheddar

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is a simplified framework: it generally keeps assets and liabilities at cost rather than requiring revaluation, and it asks for far less disclosure than the standards used by larger companies. When a qualifying company chooses the micro-entities regime, FRS 105 sets out how its financial statements should be prepared.

FRS 105 is available to companies that both qualify for the UK micro-entities regime and decide to apply it. Qualification is based on size conditions, but size alone is not the whole story — there are other eligibility rules and exclusions that can affect whether the regime is available, and a company that qualifies may still choose a fuller framework instead. For that reason, eligibility is best confirmed against your company's specific circumstances rather than assumed.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that meets the size conditions may use the regime, but it does not have to. If the regime is not chosen, the accounts would instead be prepared under a fuller standard such as FRS 102. Many directors prefer FRS 105 for its simplicity, but the decision should suit how the company wants its accounts presented.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 3 applicable size conditions to fall within the micro-entity thresholds: 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 conditions is not, by itself, a guarantee of eligibility, because other rules and exclusions can apply — for example, certain types of company are not permitted to use the regime.

Both are UK accounting frameworks, but they are aimed at different sizes of company. FRS 105 is the micro-entity standard: it relies on simpler measurement, generally at cost, and requires less disclosure. FRS 102 is the fuller standard used by small and larger entities, and it allows or requires more complex treatments and considerably more disclosure. In practice, FRS 105 accounts are shorter and more streamlined, while FRS 102 accounts give a more detailed picture and suit companies that need, or prefer, that level of reporting.

Micro-entity accounts are normally filed at Companies House, in the format required for a micro-entity, by the filing deadline that applies to your company. What is filed is typically a simplified version of what is prepared: a micro-entity balance sheet with limited notes, rather than the full profit and loss account, which is still prepared but is not generally placed on the public register. Filing the accounts is separate from your Corporation Tax obligations and from your Confirmation Statement.

Yes, they are two different things. FRS 105 Micro Entity Accounts are prepared under the accounting framework and are used to report the company's financial position. A CT600 is a Corporation Tax return submitted to HMRC, and the tax figures are calculated on tax rules, which do not always match the accounting figures. Preparing the accounts and preparing the tax return are related tasks, but one does not replace the other, and each has its own filing route and timetable.

A newly incorporated company can use the micro-entities regime in its first accounting period if it meets the relevant conditions and its directors choose to apply it. Very new companies sometimes have limited turnover and few employees in that first period, which can make the regime attractive, but the balance sheet total and any other eligibility rules still need to be considered. It is worth reviewing the position before the first set of accounts is prepared rather than partway through.

Typically you will need complete records of income and expenses for the period, bank and credit card statements, details of any assets bought or sold, payroll information if you employ staff, loan and director's loan balances, and any amounts owed to or by the company at the period end. Prior year accounts are also useful, and so is a note of anything unusual that happened during the year. Accurate, complete records make the accounts quicker to prepare and reduce the number of queries that come back to you.

Companies House has been updating its filing service over time, including a gradual move towards software-based filing of accounts and more detailed tagging of the information submitted. These changes are introduced on a rolling basis, so the practical requirements can differ depending on when your period falls and how you file. It is sensible to check the current position for your filing before you submit, rather than relying on how things were done a few years ago.