FRS 105 Micro Entity Accounts in Norton

FRS 105 is the UK financial reporting standard for companies that qualify for the micro-entities regime and choose to apply it. It is a simplified framework: qualifying companies prepare a balance sheet, a limited set of notes, and any profit and loss information required by the filing rules in force, using restricted measurement rules that keep the numbers relatively straightforward. It is an accounting framework, not a tax return.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide to apply it. Qualifying is a two-part test: the company has to meet the size conditions, and it also has to be eligible under the wider rules — some companies are excluded from the regime regardless of their size. Meeting the size thresholds does not automatically mean a company can or should use FRS 105, so eligibility is worth confirming for your particular company before you commit to the framework.

No. The micro-entities regime is an available accounting framework rather than a mandatory one. A company that qualifies for it can choose to apply it, and FRS 105 applies when that choice is made. Many qualifying companies do use it because of the reduced reporting burden, but the decision is made by the directors, and a qualifying company may instead prepare accounts under a different framework, such as the small companies regime. It is worth reviewing the choice periodically, as the company's circumstances change over time.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the following 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. These are the headline size tests, and the usual rules about how they are applied — including which periods are considered and whether a company is newly incorporated or part of a group — still apply. Separate exclusions can also prevent a company from using the regime even where it meets the size tests, so the thresholds alone are not a complete answer.

Both are UK accounting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entity standard and is deliberately narrow: it permits fewer accounting treatments and requires far fewer disclosures, which is why it suits very small companies. FRS 102 is the standard applied more widely, including by small companies using the small companies regime under Section 1A, and it allows a broader range of accounting policies and expects more detailed notes. In practice, the more detailed standard gives readers more information, while the micro-entity standard keeps preparation simpler.

Statutory accounts prepared under FRS 105 do need to be filed with Companies House, along with a balance sheet and the supporting notes, and in line with the filing requirements that apply to micro-entity accounts at the time. The format and content of what is filed is more limited than the full accounts prepared for the members. Filing the accounts is a separate exercise from submitting a CT600 Corporation Tax Return to HMRC, and each has its own requirements and timing.

Yes, they are separate. FRS 105 Micro Entity Accounts are the company's statutory financial statements, prepared under an accounting framework and filed with Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, and it is calculated using tax rules, which can treat items differently from the accounts — for example, in relation to capital allowances or disallowable expenses. The accounts often provide the starting point for the tax computation, but the two documents serve different purposes and go to different bodies.

We generally need the company's bookkeeping or accounting records for the period, bank and credit card statements, sales and purchase records, payroll information if the company employs anyone, details of any assets bought or sold, loan and director's account balances, and the previous year's accounts where they exist. If you are switching accountant, it also helps to have the last set of filed accounts and the trial balance or accounting file. The cleaner the records, the quicker the accounts come together — and if your records are behind, we can talk about the most practical route forward.

Companies House has been reforming the way small and micro-entity companies file their accounts, with a shift towards software-based filing and a move to require profit and loss information alongside the balance sheet. The changes are being introduced in stages, and the detail matters for how a set of micro-entity accounts is prepared and submitted. Because the position can move, the sensible approach is to check the current requirements for your specific accounting period before you file, rather than assuming last year's approach still applies.