FRS 105 Micro Entity Accounts in Isleworth: Straightforward Financial Reporting for Qualifying Companies

FRS 105 is the UK financial reporting standard that underpins the micro-entities regime. It explains how a company using that regime should recognise, measure and present the items in its financial statements. It is the simplest of the UK accounting frameworks: figures are generally kept at historic cost, revaluation and fair value accounting are not permitted, and the number of required disclosures is limited. In practice, most companies reporting under FRS 105 produce a balance sheet, a profit and loss account and a short set of notes.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and choose to apply it. 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. Those conditions sit alongside other eligibility rules and exclusions, and special rules can apply in areas such as group structures. Meeting the size conditions on their own does not guarantee that the regime is available, so it is worth checking your specific position.

No. The micro-entities regime is an available accounting framework rather than a requirement. A company that qualifies may choose to apply the micro-entities regime, in which case FRS 105 is the standard it uses — but a qualifying company is also entitled to report under a fuller framework, such as FRS 102, if that suits its circumstances better. Some companies choose FRS 105 for simplicity and lower preparation costs; others prefer a broader framework, for example because of the way they present their results to lenders or investors. Once a framework is chosen, it should be applied consistently.

FRS 105 is the framework for companies using the micro-entities regime, while FRS 102 is the UK standard for larger and small entities that do not fall into that regime. The practical differences are mostly about measurement and disclosure: FRS 105 works on a historic cost basis with no revaluation or fair value accounting and a short set of notes, whereas FRS 102 allows a wider range of measurement options and requires considerably more disclosure. FRS 102 also includes a specific section for small entities preparing and filing accounts, which some qualifying businesses find a better fit.

Companies that prepare accounts under the micro-entities regime can generally file micro-entity accounts with Companies House, subject to the filing rules that apply to them. The accounts that are filed may be a reduced version of the full financial statements prepared for the members, and a company may be able to file a balance sheet without a profit and loss account in certain circumstances. Filing is a statutory obligation with its own deadline, and it is separate from any Corporation Tax deadline you may have with HMRC. It is always worth confirming exactly what needs to be filed and when for your particular company.

Yes, they are two different pieces of work. FRS 105 accounts are the financial statements, dealing with how your income, costs, assets and liabilities are reported. A CT600 is the Corporation Tax Return submitted to HMRC, and it starts from your profit figure but then applies tax-specific adjustments — depreciation and capital allowances being common examples — to arrive at taxable profit. The accounts and the return are prepared for different audiences and submitted to different bodies, so they need to be handled separately even though they are closely related.

It can, if it meets the eligibility conditions and chooses to apply the micro-entities regime. Most newly formed companies start small, so the micro-entity size conditions are commonly met, but the size tests still have to be assessed for the period in question and the other eligibility rules and exclusions must be considered too. A first set of accounts can also raise practical questions about how a short or unusual accounting period is treated. If you are setting up or have recently incorporated a company in Isleworth, it is worth reviewing the position before your first accounts are prepared.

The UK filing framework continues to evolve, and the micro-entity size thresholds were updated for accounting periods beginning on or after 6 April 2025, so figures and guidance you have seen from earlier years may no longer reflect the current position. Filing methods and the level of detail expected have also been the subject of ongoing reform. Because the rules can shift, the sensible approach is to review your company's eligibility and filing position each year rather than assuming that last year's treatment still applies — and to make sure your records and software are set up to support the way your accounts will be submitted.