FRS 105 Micro Entity Accounts in Chobham

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sits within UK GAAP alongside FRS 102 but is deliberately simplified: assets and liabilities are measured on straightforward historical cost principles, there is no requirement to use fair value accounting or revalue fixed assets, deferred tax is not recognised, and the notes to the accounts are limited to a short prescribed set. Accounts prepared under FRS 105 are presumed to give a true and fair view of the company's financial position, which is why it is the framework of choice for many very small companies in Chobham and across the UK.

FRS 105 is available to companies that qualify for the UK micro-entities regime and whose directors choose to apply it. In general terms that means very small companies that sit within the applicable size limits and are not caught by any of the exclusions that apply to the regime — for example, certain entities that cannot use the small companies regime at all. A newly incorporated company can use FRS 105 for its first accounting period if it meets the conditions, and a dormant company may also qualify, depending on its circumstances. Meeting the size limits is necessary but not always sufficient, so eligibility should be checked against the rules for your specific period before the framework is adopted.

No. The micro-entities regime is an available accounting framework, not a mandatory one. A company that meets the micro-entity conditions may instead prepare small company accounts under Section 1A of FRS 102, which allows somewhat more flexibility but requires more disclosure. Some businesses prefer that route if they want to present fair value information, follow group accounting policies or meet specific lender or investor expectations. Because the choice affects how the numbers are presented, it is worth reviewing before the accounts are drawn up rather than afterwards, and it is sensible to apply the same framework consistently from one period to the next unless there is a good reason to change.

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: 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. These conditions sit alongside the wider rules governing the micro-entities regime, including the requirement that the company is not excluded from it. Meeting two of the three conditions does not automatically mean a company qualifies, and accounts already prepared under the previous, lower thresholds for earlier periods are not affected in retrospect. Where a company sits close to a limit, the position should be reviewed carefully for each set of accounts.

FRS 102 is the main UK GAAP standard and is used by most small and medium-sized companies, with Section 1A providing a reduced-disclosure version for small companies. FRS 105 is a separate, more streamlined standard for micro-entities. Compared with FRS 102 Section 1A, FRS 105 permits less choice — for instance, no revaluation of property, plant and equipment, no fair value measurement of investment property and no deferred tax — but it also demands far fewer notes to the accounts. If a company needs to show assets at fair value, or has arrangements that do not fit neatly into historical cost accounting, FRS 102 may be the more practical framework even where the company is small enough for the micro-entities regime.

Yes. Statutory annual accounts for a limited company must be delivered to Companies House, and where FRS 105 Micro Entity Accounts are prepared for the members, those accounts are the statutory accounts that are filed. Under the micro-entities regime, the version delivered to Companies House may consist of the balance sheet and notes without the profit and loss account, although the full accounts prepared for the members include the profit and loss account in the usual way. This filing obligation is separate from Corporation Tax, and it is also separate from the Confirmation Statement, which is a different Companies House filing covering company details rather than financial results.

Yes, they are two distinct things. FRS 105 Micro Entity Accounts are the statutory financial statements, prepared under the micro-entities regime and filed with Companies House. The CT600 is the Corporation Tax Return submitted to HMRC, which starts from the company's taxable profits rather than simply copying the accounts and then applies tax adjustments — for example, adding back disallowable expenditure or claiming capital allowances. The two documents are prepared on different bases and go to different organisations, so figures in the accounts and in the tax return will not always match. Keeping proper records throughout the year makes both exercises smoother.

Two developments are worth being aware of. First, the size thresholds used to determine whether a company counts as a micro-entity were increased for accounting periods beginning on or after 6 April 2025, which means more very small companies may now fall within the regime if they choose to apply it. Second, Companies House is moving towards digital, software-based filing of accounts, and wider company law reforms are expected to require small and micro-entity companies to file more information than they do today, including profit and loss figures. These changes are being introduced on timetables set by Companies House and HMRC, so it is worth checking the current position for your filing date rather than relying on how things were done a few years ago.