FRS 105 Micro Entity Accounts in Somerville

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime — the smallest and simplest reporting framework available to qualifying UK companies. It is designed to be proportionate, based largely on historic cost, with a much shorter set of disclosures than frameworks such as FRS 102. In practice, FRS 105 accounts typically consist of a balance sheet, a small profit and loss account, and the limited notes the standard requires. It is worth stressing that FRS 105 governs the accounts only; it has nothing to do with how your Corporation Tax is calculated or filed.

FRS 105 is intended for companies that both qualify for the micro-entities regime and choose to apply it. 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. Meeting those conditions is not the whole story, though — other eligibility rules and exclusions can apply, and some companies are excluded from the regime regardless of size. Qualifying also does not oblige you to use it; the regime is a choice, and a company that qualifies may decide a different framework suits it better.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies for it can still choose to report under another framework, and in some cases that may be preferable — for example where the company wants to apply accounting treatments, such as revaluation or fair value, that the micro-entities regime does not permit. FRS 105 applies when the micro-entities regime is the regime chosen. Before deciding, it is worth considering who uses your accounts, whether there are lender or investor expectations to meet, and whether any group or contractual arrangements constrain your choice.

Both are UK financial reporting standards, but they sit at different levels of complexity. FRS 102 is the main standard for larger entities and permits a wider range of accounting treatments, including fair value accounting and revaluation, and it requires considerably more disclosure. FRS 105 is the micro-entities standard: simpler measurement, mostly historic cost, and far fewer notes. The practical consequence is that a set of FRS 105 accounts is usually shorter and cheaper to prepare. The trade-off is flexibility — some accounting choices available under FRS 102 are simply not available under FRS 105.

Where a company prepares accounts under the micro-entities regime, those accounts typically need to be filed with Companies House as part of the company's annual filing obligations, in the form and within the periods that apply to it. Filing the accounts is a separate step from preparing them, and separate again from your Corporation Tax obligations. Because the requirements and available filing routes can change, it is worth checking the position for your particular accounting period rather than relying on how things were done in previous years.

Yes, they are entirely separate. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities framework, and they are filed with Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, and it is calculated on its own basis, which can differ from the accounting figures — for example where tax adjustments or capital allowances apply. Preparing one does not discharge the obligation to deal with the other, and they may well have different deadlines. It is sensible to treat them as two distinct pieces of work that happen to draw on the same underlying records.

It can be possible, but a newly incorporated company needs to look at the applicable conditions in its own circumstances rather than assuming it is automatically eligible. A first accounting period may be longer or shorter than twelve months, which affects how turnover and employee numbers are assessed, and the size tests are generally applied in the context of the rules in force for that period. It is also worth confirming that no exclusion applies. If a new company is unsure, the practical approach is to review the period length, expected turnover, balance sheet position and headcount before deciding which framework to adopt.

At a minimum, you will need complete records for the accounting period: bookkeeping or accounting software data, bank statements and reconciliations, sales and purchase records, payroll information if you run a payroll, details of any assets bought or sold, loan and finance agreements, VAT records where relevant, and information about director's loans or other transactions with the company. Closing stock, accruals and prepayments matter too, as do any balances carried forward from the previous year. Providing these promptly and completely makes the preparation more straightforward and reduces the number of queries that come back to you.

Company filing requirements in the UK have been subject to reform, and the way small and micro-entity accounts are prepared and submitted is evolving — including moves towards filing accounts in a more structured, digital format and changes to what can be filed. Because the detailed rules and commencement dates differ between accounting periods, the safest approach is to check the requirements that apply to your specific year end rather than relying on general summaries. If you would like clarity on how changes affect your FRS 105 Micro Entity Accounts, it is worth discussing your period end and filing arrangements with us directly.