FRS 105 Micro Entity Accounts in Eaton Bray

FRS 105 is the UK financial reporting standard that sets out how the financial statements must be prepared when a qualifying company chooses to apply the micro-entities regime. It is the smallest and simplest of the UK accounting frameworks, aimed at companies that meet the relevant size conditions. It typically involves a balance sheet, a limited number of notes, and more prescriptive measurement rules than the larger frameworks, with less scope for choice in accounting policies. It governs the accounts themselves, not your Corporation Tax Return or your Confirmation Statement.

FRS 105 is available to companies that qualify for the micro-entities regime and choose to apply it. Qualification depends on size, and for accounting periods beginning on or after 6 April 2025 a company generally needs to meet at least 2 of 3 applicable 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 story, though — other rules and exclusions can apply, and certain companies are not eligible. Eligibility also has to be considered for each period, so it is worth checking your position before assuming FRS 105 applies.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies may still choose to prepare its accounts under a different framework, such as FRS 102 Section 1A, if that better suits its circumstances — for example where it needs greater disclosure or different accounting treatments for lenders or investors. FRS 105 applies when the micro-entities regime is the regime chosen for that period. Because the two frameworks produce different accounts and different disclosure levels, the choice is worth making deliberately rather than by default.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 applicable size conditions to qualify as a micro-entity: turnover of no more than £1 million, balance sheet total of no more than £500,000, and an average of no more than 10 employees. These thresholds differ from those that applied to earlier periods, so older guidance can be misleading. In addition, the rules include exclusions and specific conditions that can affect whether a company qualifies at all, which means size alone does not automatically guarantee eligibility.

FRS 105 is the framework for qualifying companies that choose the micro-entities regime, while FRS 102 is the wider UK standard, with Section 1A applying to small companies that are not micro-entities. In practical terms, FRS 105 is more prescriptive and produces shorter accounts with fewer notes and less choice over accounting policies. FRS 102 Section 1A offers more flexibility and requires more disclosure, which some companies prefer because it gives a fuller picture to banks, investors or group companies. Which framework is appropriate depends on eligibility, what the accounts will be used for, and the company's own circumstances.

Yes, company accounts prepared under FRS 105 are still company accounts, and they are filed at Companies House in the usual way for the company's accounting reference date, alongside the other annual filings required. FRS 105 determines how the accounts are drawn up and what they contain; it does not remove the filing obligation itself. Small and micro-entity companies can often file simpler or reduced information, and the filing requirements have been evolving, so it is worth confirming what is expected for your company and your period before the deadline approaches.

Yes. They are two distinct obligations. Your FRS 105 Micro Entity Accounts are the financial statements prepared under the accounting framework and filed at Companies House. A CT600 is a Corporation Tax Return submitted separately to HMRC, which computes the company's taxable profit and the tax due. The accounts usually form the starting point for the tax computation, but the tax return applies tax rules that differ from accounting rules, so the figures will not always match. Keeping the two filings separate in your records helps avoid confusion.

A newly incorporated company can apply the micro-entities regime from its first accounting period if it qualifies under the size conditions and there are no rules or exclusions that prevent it — many new companies start small enough to do so. The position should be reviewed as the business grows, because once turnover, balance sheet total or employee numbers increase, the company may no longer qualify and may need to move to a different framework. It is also worth remembering that a first set of accounts has its own practical considerations, such as the first accounting reference date and the period actually being reported on.