FRS 105 Micro Entity Accounts in Markfield

FRS 105 is the UK financial reporting standard for micro-entities. It sets out how qualifying companies that choose to apply the micro-entities regime should measure and present their financial statements. It is deliberately simpler than the standards used by larger companies: there is no revaluation or fair value accounting, disclosure requirements are far lighter, and the resulting accounts are usually much shorter. FRS 105 is a reporting framework, not a tax regime — it governs how the accounts are prepared, not how much tax is due.

FRS 105 is available to companies that both 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. Meeting those size tests is not the whole story, because other eligibility rules and exclusions can apply — for example, certain company types and activities are not eligible. Eligibility should always be confirmed against your specific circumstances before a framework is adopted.

No. The micro-entities regime is an available accounting regime rather than a mandatory one. A company that qualifies can choose to apply it, and FRS 105 applies when that choice is made. Some qualifying companies instead prepare their accounts under FRS 102 Section 1A, which offers a different balance of simplicity and disclosure. The right decision depends on your company's circumstances, its relationships with lenders or investors, and how much detail the users of the accounts need, so it is worth discussing before you commit to an approach.

Both are UK financial reporting standards, but they are aimed at different sizes of company and take different approaches. FRS 105 is the micro-entities standard and is the most streamlined option, with assets generally held at cost and very limited disclosures. FRS 102 is the broader standard, and Section 1A of it provides a reduced-disclosure framework for small companies that are not applying the micro-entities regime. In practice, FRS 102 Section 1A allows more accounting options — such as revaluation in some circumstances — but also asks for more disclosure. Choosing between them is a question of eligibility and of what best serves the people who read your accounts.

Companies that are required to file annual accounts with Companies House still need to do so, whether they use FRS 105 or another framework. What changes under the micro-entities regime is the content and level of detail in those accounts, and it is common for a company to file a reduced set of statements while preparing a fuller version for its members. Filing at Companies House is a separate process from anything submitted to HMRC, and the filing requirements for small and micro-entity accounts are evolving, so it is sensible to check the current position when your filing date approaches.

Yes. FRS 105 accounts are financial statements prepared under a particular accounting framework, while a CT600 is the Corporation Tax Return submitted to HMRC. They are separate documents with separate purposes and separate submission routes. That said, the two are closely related, because the accounts provide the starting point for the figures reported for tax, and adjustments are often needed to move from accounting profit to taxable profit. Keeping your accounting records well organised makes both tasks more straightforward and helps ensure the figures in each document tell a consistent story.

A newly incorporated company may be able to use FRS 105 if it meets the eligibility conditions for the micro-entities regime and chooses to apply it. A first accounting period can raise extra questions, because the period may be longer or shorter than twelve months and because there may be no comparative figures. There can also be different considerations in a company's first year, such as start-up costs and the treatment of certain balances. It is worth taking advice early so that your records are set up in a way that makes the first set of FRS 105 Micro Entity Accounts straightforward to prepare.

We normally need your bookkeeping records or a trial balance for the period, bank statements and reconciliations, details of sales and purchases, payroll information, any loan or hire purchase agreements, stock or work-in-progress figures where relevant, and details of fixed assets and depreciation. Previous years' accounts are useful for comparatives, and any correspondence about your company's filing obligations helps us understand the wider picture. If your records are incomplete, we can talk through what is missing and how best to fill the gaps before preparation begins.

The way small and micro-entity accounts are filed is changing. Reforms to company filing requirements are being introduced in stages, with a move towards filing accounts in a structured, software-based format and with additional information expected to be required in future, including profit and loss information for some companies. Because the changes take effect at different points, the precise requirements depend on your accounting period and when the relevant provisions come into force. If you would like to understand how the changes may affect your FRS 105 Micro Entity Accounts, we can review your position with you.