FRS 105 Micro Entity Accounts in Polegate

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how a qualifying micro-entity prepares and presents its financial statements, including the permitted formats for the balance sheet and profit and loss account and the limited notes required. It is deliberately simpler than the fuller standards used by larger companies: FRS 105 works on a historical cost basis and does not permit the revaluation or fair value measurement options found elsewhere. In practice, it allows very small companies to produce a short, readable set of accounts rather than a lengthy set of disclosures.

FRS 105 is available to companies that qualify as micro-entities under the UK micro-entities regime and that choose to apply that regime. Qualifying is not the end of the story, though. A company must also not fall within any of the relevant exclusions, and some entities — certain financial or investment businesses, for example — may be prevented from using the regime regardless of their size. This is why it is worth checking eligibility carefully rather than assuming that a small company automatically qualifies. Where a company does qualify and the directors decide the simplified approach is appropriate, FRS 105 applies to the accounts.

No. The micro-entities regime is an available accounting regime, not an automatic requirement. A company that qualifies as a micro-entity can generally choose between the micro-entity framework and the small companies regime, and different frameworks carry different levels of disclosure and different measurement rules. Directors weigh up factors such as how the accounts will be used, whether lenders or investors expect a particular level of detail, and whether the company's plans make the simplified approach sensible. FRS 105 applies once the micro-entities regime has been chosen; if a different regime is selected, a different standard will apply instead.

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. Those 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. Meeting the size conditions is a starting point rather than a guarantee: other eligibility rules and exclusions can still apply, and companies that have previously been outside the regime may face additional considerations when moving in or out of it. Older thresholds that circulated in previous years should not be relied on.

Both are UK financial reporting standards, but they are aimed at different sizes of company and offer different levels of complexity. FRS 102 is the fuller framework, and it permits or requires things FRS 105 does not — such as revaluations, fair value measurement of certain items, and deferred tax accounting — along with considerably more extensive disclosure notes. The small entities version of FRS 102, often referred to as Section 1A, sits between the two in terms of detail. FRS 105, by contrast, strips things back to a historical cost model with minimal notes. The right choice depends on eligibility and on what the company and its users of the accounts actually need.

Yes — a limited company must file its annual accounts with Companies House, and if the company has prepared FRS 105 Micro Entity Accounts, those are the accounts that get filed. Filing accounts with Companies House is separate from dealing with HMRC, and it is also separate from the Confirmation Statement, which is a distinct filing covering company information rather than financial results. Micro-entity accounts can be simpler in format than other filings, but they still need to be prepared correctly and submitted through the proper channel. It is worth checking current Companies House guidance for how accounts must be delivered, as filing methods and formatting expectations have been changing.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities reporting framework. A CT600 is a Corporation Tax Return submitted to HMRC to report the company's taxable profits and calculate the tax due. They serve different purposes, go to different bodies, and follow different rules — although the figures behind them should be consistent with one another. Preparing the accounts and dealing with the Corporation Tax Return in a joined-up way helps avoid discrepancies and makes the whole process more straightforward for directors.

A newly incorporated company can use FRS 105 if it qualifies as a micro-entity for the period in question and the directors choose to apply the micro-entities regime. For a first accounting period, eligibility is generally assessed by reference to that period rather than to a preceding one, which means a new company with modest turnover, a small balance sheet and few employees may well be within the size conditions. That said, the exclusions and the wider eligibility rules still need to be checked, because size alone does not always settle the question. If you are setting up or have recently set up a company in Polegate, it is worth reviewing the position for your first set of accounts before deciding on a framework.

The starting point is a complete and accurate set of records for the accounting period: sales and income records, purchase and expense records, bank and cash statements, and details of any amounts owed to or by the company. It also helps to have information about assets owned — equipment, vehicles, computer hardware, for example — along with any loans, hire purchase agreements or other liabilities, plus details of share capital and director transactions. If the company has been trading for more than one period, the previous year's accounts or trial balance are useful for comparable figures. The clearer and more up-to-date your bookkeeping, the more efficiently FRS 105 Micro Entity Accounts can be prepared.