FRS 105 Micro Entity Accounts in Sandwich

FRS 105 is the UK financial reporting standard designed for companies that qualify for the micro-entities regime and choose to apply it. It sets out a simplified basis for preparing financial statements, focusing on the balance sheet and profit and loss account with far less disclosure than the standards used by larger companies. It is a reporting framework, not a tax regime — the accounts it produces are separate from the Corporation Tax return filed with HMRC.

FRS 105 is intended for companies that qualify as micro-entities under the UK rules and that decide to use the micro-entities regime. 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. Other eligibility rules and exclusions can also apply, so meeting the size conditions alone does not automatically mean a company qualifies, and the regime is a choice rather than a requirement.

No. The micro-entities regime is an available accounting regime for qualifying companies, not a mandatory one. A company that meets the criteria can choose to apply it, and FRS 105 applies when that regime is chosen. Some qualifying companies prefer to use a different framework — for example where a lender, investor or group parent wants more detail — so the decision is usually taken after looking at who will read the accounts and what they need from them.

FRS 102 is the broader UK financial reporting standard used by a wide range of companies, and it comes with more detailed recognition, measurement and disclosure requirements. FRS 105 is the slimmed-down alternative for qualifying micro-entities, with simpler presentation and far fewer notes. The practical impact is that FRS 105 accounts are shorter and more straightforward, while FRS 102 accounts give a fuller picture — which is why the choice often comes down to eligibility plus what the directors and other users of the accounts actually want to see.

Where a company prepares FRS 105 Micro Entity Accounts for a financial year, those accounts will normally form the basis of what is filed at Companies House, subject to the filing requirements that apply to that company. Filing the accounts is a separate exercise from dealing with Corporation Tax, and the format submitted to Companies House is a prescribed version of the financial statements. Your adviser can prepare the accounts and handle the Companies House submission as part of the same engagement, but it is worth remembering that Companies House does not review or approve the content — responsibility for what is filed rests with the directors.

Yes, they are two distinct things. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities framework and filed at Companies House. A CT600 is the Corporation Tax return submitted to HMRC, which calculates the tax due based on the company's taxable profits. The accounts usually provide the starting point for the tax computation, but the CT600 is a separate filing with its own deadlines, adjustments and supporting schedules.

A newly incorporated company can use FRS 105 if it qualifies for the micro-entities regime and chooses to apply it — but qualification is assessed against the relevant criteria, not simply because the company is new or small. A first-year company may have limited trading history, so the size conditions need to be considered carefully alongside any exclusions that apply. It is usually worth discussing the position early, especially if the company expects to grow, take on investment, or secure lending in the near future.

In practice, a preparer will need your bookkeeping or accounting records for the period, bank and credit card statements, sales invoices and purchase records, payroll information if you employ anyone, details of any loans or director's loans, and a list of assets such as equipment, vehicles or property along with any finance agreements. It also helps to have the previous year's accounts, your company registration details, and a note of anything unusual that happened during the year — a one-off purchase, a bad debt, a change in how you trade. The cleaner and more complete the records, the smoother the preparation process tends to be.

The UK company filing environment has been evolving, including through reforms that affect how small and micro-entity accounts are filed, with a move towards filing accounts in a digital, tagged format and other changes to company reporting requirements. Because the detail and timing of these changes matter, and because rules can be updated, it is always worth checking the current position with your adviser before you file. The underlying principle stays the same: FRS 105 Micro Entity Accounts should reflect the company's actual circumstances under the framework that applies at the time.