FRS 105 Micro Entity Accounts in Millom — Prepared for Qualifying Micro-Entities

FRS 105 is the UK financial reporting standard applicable to the micro-entities regime. It sets out how a qualifying micro-entity should measure and present the items in its annual financial statements, and what it needs to disclose. It is deliberately simpler than the standards used by larger companies: there are fewer notes to the accounts, no revaluation of fixed assets, no deferred tax and no fair value accounting for most items. Where a company chooses the micro-entities regime, FRS 105 is the standard it prepares its accounts under.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and then choose to apply it. Qualifying normally means meeting the micro-entity size conditions, but size is not the whole story — certain companies are excluded from the regime regardless of their size, for example companies with securities admitted to trading on a regulated market, and there are rules that can affect companies within a group. In practice, the sensible approach is to check the size conditions and the exclusions together before deciding, rather than assuming that a small company automatically qualifies.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that falls within the micro-entity size limits may choose to prepare its accounts under the regime, but it does not have to. Some directors prefer the additional options and disclosures available under the small-company framework, for instance where they want to revalue property or where a lender or investor expects a fuller set of financial statements. The decision is made by the directors, and once the regime is adopted the accounts should be prepared consistently on that basis.

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. Those conditions are subject to the relevant rules and exclusions, so meeting the size tests alone does not guarantee that the regime is available — other eligibility requirements and exclusions can still apply. Where a company is part of a group, or where its circumstances have changed during the year, it is worth looking at the position carefully.

FRS 102 is the wider UK standard, and Section 1A of FRS 102 is the version used by small companies that do not apply the micro-entities regime. FRS 102 Section 1A gives you more accounting options — for example, the ability to revalue certain fixed assets, recognise deferred tax and use fair value in more situations — and it requires considerably more disclosure. FRS 105 removes most of those options and cuts the disclosure requirements right down, which is what makes micro-entity accounts shorter and cheaper to prepare. The trade-off is less flexibility over how items are presented and fewer notes available to explain the figures.

Yes. Filing annual accounts at Companies House is a separate legal obligation that applies to companies, whatever reporting framework they use. A micro-entity that has adopted the regime can prepare and file accounts under it, and the set filed is typically shorter than a full set of financial statements — usually a balance sheet with limited notes, rather than a full profit and loss account. The accounts filed become part of the public record. Filing accounts is distinct from filing a Confirmation Statement, which is a separate Companies House requirement confirming that the information held about the company is up to date.

Yes, they are two different things. FRS 105 accounts are the financial statements prepared under the micro-entities regime, dealing with how the company's income, expenses, assets and liabilities are reported. A CT600 is the Corporation Tax Return submitted to HMRC, which deals with the company's taxable profits and any tax due, and it has its own submission deadline set by HMRC. The tax return starts from the accounting figures, but tax adjustments mean the taxable profit is often not the same as the profit shown in the accounts, so the two documents should not be treated as interchangeable.

Companies House has been moving towards a more digital filing process. Under the changes being introduced, smaller companies — including those using the micro-entities regime — will be expected to file their accounts using recognised software rather than a paper or PDF submission, and to provide profit and loss information alongside the balance sheet. The changes are being brought in on a phased basis, so the exact requirements depend on your accounting period. It is worth checking the current position for your company's year end as it approaches, so that your accounts and filing are prepared in the right format from the outset.