FRS 105 Micro Entity Accounts in Hailsham — Simpler Financial Statements for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard for micro-entities. It sets out the recognition, measurement and disclosure requirements that apply when a qualifying company chooses to use the micro-entities regime. It is deliberately shorter and simpler than the standards used by larger companies, with reduced disclosure notes and a more straightforward approach to measuring many items. In practical terms, it governs how the company's balance sheet and profit and loss account are put together for the period and what has to be said about them in the notes.

FRS 105 is available to companies that qualify as micro-entities under the UK rules and that decide to apply the micro-entities regime. 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. Passing those size tests alone does not guarantee eligibility. Other rules and exclusions can apply — for example where the company's structure, group relationships or activities fall outside what the regime permits — and the conditions generally need to be satisfied on a consistent basis across periods. It is worth checking your position rather than assuming.

No. Qualifying for the micro-entities regime and applying it are two separate things. A company that meets the size conditions may choose to prepare FRS 105 Micro Entity Accounts, but it is equally entitled to report under another framework, such as FRS 102, including the small company provisions in Section 1A. Once a framework has been adopted it should be applied consistently, and a change of framework is something to plan rather than do casually. The choice belongs to the company, but the practical consequences — the level of detail in the accounts and what ends up on the public record — are worth weighing up.

Both are UK standards, but they serve different types of company. FRS 105 is restricted to micro-entities and is built around simpler measurement rules and much lighter disclosure. FRS 102 is a fuller framework used by small and larger entities, with more detailed recognition and measurement requirements and considerably more disclosure. Practical differences include how certain assets are measured and the fact that FRS 105 does not permit some of the accounting options available under FRS 102. The result is that FRS 105 accounts are shorter and more streamlined, while FRS 102 accounts give a more detailed picture of the company.

Yes. Choosing the micro-entities regime changes how the accounts are prepared, not whether they are filed. A company preparing FRS 105 Micro Entity Accounts still has to deliver annual accounts to Companies House in the normal way, unless a specific exemption applies to it. It is also worth knowing that the options for filing simplified versions of accounts have been narrowed for accounting periods beginning on or after 6 April 2025, so what is placed on the public record may contain more information than was previously the case. Filing at Companies House is entirely separate from anything submitted to HMRC.

Yes — they are two distinct filings aimed at two different audiences. FRS 105 accounts are the financial statements prepared under the micro-entities regime and, in most cases, filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC to report the company's taxable profits. The figures in the return need to be consistent with the accounts, and adjustments are often required to move from accounting profit to taxable profit, so in practice the two are prepared alongside one another — but they are not the same document, and they are not filed with the same body.

It can, if it qualifies for the micro-entities regime and chooses to apply it. A newly incorporated company generally has little or no trading history behind it, so the size conditions are often straightforward to satisfy at the outset, but eligibility still depends on the full rules and on any exclusions that apply to the company, including matters relating to its structure and group relationships. A first set of accounts also raises questions about the period covered and which figures are available, so it is sensible to discuss the position before preparation begins.

Broadly speaking, we need a complete and accurate record of the company's transactions for the period. That usually includes bookkeeping or accounting software records, bank and credit card statements, sales and purchase invoices, payroll information, details of any loans or finance agreements, and an asset register or list of equipment purchased. If the company holds stock, information on stock levels at the period end is helpful too. Where records are incomplete or partly missing, we can talk through what is needed and how best to fill the gaps before the accounts are prepared.