FRS 105 Micro Entity Accounts in Newbury

FRS 105 is the financial reporting standard within UK GAAP that sets out how qualifying micro-entities prepare their statutory accounts when they choose to apply the micro-entities regime. It is a deliberately simplified framework: financial statements are generally prepared on a historic cost basis, there is no option to revalue assets, deferred tax is not recognised, and the disclosure notes are far shorter than those required under fuller standards. The result is a set of accounts proportionate to the size and complexity of a very small company, while still reporting the company's financial position and its performance for the period.

FRS 105 is available to companies that qualify for the UK micro-entities regime and decide to apply it. Qualifying is about size, but also about the rules that sit around the regime. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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. Some companies cannot use the regime at all, whatever their size, so eligibility should be checked against your company's own circumstances rather than assumed. Companies in Newbury and the surrounding area can ask us to review this with them.

No. The micro-entities regime is an available accounting framework, not an obligation. A company that qualifies for the regime can choose whether to apply it, and many qualifying companies do because it simplifies reporting and reduces the volume of disclosures. Others choose FRS 102 instead, for example where they want fair value accounting, need more detailed disclosures, or wish to stay consistent with a parent company or group. What matters is that the framework used is appropriate to the company, that it is applied consistently, and that the resulting accounts are prepared properly.

For accounting periods beginning on or after 6 April 2025, the size conditions are 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. A company generally needs to meet at least 2 of those 3 conditions to fall within the micro-entities regime, subject to the applicable rules and exclusions. Where an accounting period is longer or shorter than a year, the thresholds may need to be adjusted proportionately. Meeting the size conditions alone does not automatically confirm that the regime is available, so the wider eligibility rules should be considered as well.

Both sit within UK GAAP, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard: it is built on historic cost, offers a very short set of disclosure notes, does not permit revaluation of assets, and does not recognise deferred tax. FRS 102 is a broader standard used by small, medium and larger entities. It allows more accounting policy choices, such as fair value measurement in certain circumstances, and requires substantially more disclosure. A company that outgrows the micro-entity criteria, or that needs a more detailed set of financial statements, would generally move to FRS 102 or another applicable framework.

If your company is required to file annual accounts, then the accounts prepared under FRS 105 are the accounts that get filed. They must first be approved by the board and signed on behalf of the directors, and the version filed can be the full set or a version with the profit and loss account omitted, depending on the filing option chosen. Filing deadlines depend on your company's accounting reference date and on whether it is a first set of accounts. Companies House has also been moving towards accounts being filed through commercial software rather than by paper or PDF, so it is worth checking the current accepted filing method before you submit.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the statutory financial statements prepared under the micro-entities regime and, where required, filed at Companies House. A Corporation Tax Return, form CT600, is a separate submission made to HMRC covering the company's taxable profits for the period, and any corporation tax due is paid separately. Your accounts usually provide the starting point for the tax computation, but the accounts themselves are not a tax return, and the two have different formats, audiences and deadlines.

Usually a set of up-to-date accounting records covering the period: bookkeeping or a trial balance, bank statements and reconciliations, sales and purchase records, payroll and pension information, and details of fixed assets, loans and any director balances. It also helps to have your previous year's accounts, your company registration details and confirmation of your accounting period. You do not need everything perfectly packaged before you get in touch, as a quick review of what you already hold is often the fastest way to work out what is needed and whether FRS 105 looks like the right basis for your accounts.