FRS 105 Micro Entity Accounts in St Andrews

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It sets out how qualifying micro-entities recognise and measure items in their financial statements and which notes and disclosures are required. It is deliberately streamlined, with fewer accounting options and far less disclosure than standards aimed at larger companies, which is why it is often chosen by very small companies that want proportionate accounts. FRS 105 is an accounting and reporting framework; it is not a tax return, and it does not by itself change how much Corporation Tax your company owes.

FRS 105 is intended for companies that qualify for the micro-entities regime and choose to apply it. In broad terms, for accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of 3 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 the size conditions is not the whole story, because other eligibility rules and exclusions can apply, and certain entities are not able to use the regime. Eligibility should be assessed against your own company's position, and choosing the regime is a decision rather than something that happens automatically.

No. The micro-entities regime is an available accounting regime, not a compulsory one. A company that qualifies as a micro-entity can generally choose whether to apply it, and FRS 105 applies when that choice is made. Some qualifying companies prefer to prepare accounts under another framework, for example FRS 102 Section 1A, because of the way they want to present particular items, because of a lender's or investor's preferences, or because they want more detailed disclosures. If your company does not qualify as a micro-entity, FRS 105 is not available and a different framework would need to be used.

Both sit under the same overall UK accounting framework, but they are pitched at different sizes of company. FRS 105 is the simplest option, reserved for qualifying micro-entities: it takes a narrow, largely historic cost approach, does not recognise certain items such as deferred tax, and requires only limited disclosures. FRS 102 — and in particular FRS 102 Section 1A for small companies — offers a wider range of accounting policy choices and requires more extensive notes. The practical effect is that the same business can produce different figures and a very different set of notes depending on which framework is applied, so the choice is worth thinking through carefully.

Yes. For most companies, the annual accounts prepared for the members are also filed at Companies House, and a company using FRS 105 will typically file micro-entity accounts there using the appropriate filing option. The accounts are prepared for a specific accounting period and must be delivered in line with the requirements set out by Companies House, including the correct period dates and format. Filing the accounts is separate from telling Companies House about changes to your company's officers, share capital or registered office, and separate again from your Corporation Tax filing obligations. We do not imply any approval or endorsement by Companies House in relation to your accounts.

Yes, they are different things. FRS 105 Micro Entity Accounts are the financial statements, prepared under the micro-entities regime for the company's accounting period. A Corporation Tax Return, normally the CT600, is a separate submission made to HMRC to report the company's taxable profits and calculate its Corporation Tax liability, and it is supported by tax computations and adjustments that start from the accounts figures but do not simply repeat them. Items that are treated one way in FRS 105 accounts may be treated differently for tax, so the two documents need to be prepared and reviewed alongside each other even though they are distinct filings.

As a starting point, we would normally look for your company's bank and credit card statements for the full accounting period, sales and purchase invoices, receipts, payroll or contractor information, details of any assets bought or sold, loan and finance agreements, and stock or work-in-progress figures where relevant. It is also helpful to have the previous year's accounts, your company registration details, and any correspondence from HMRC or Companies House relating to the period. The more complete and well-organised your records are, the more straightforward the preparation process tends to be, and we can talk you through what to send if you are unsure where to start.

A newly incorporated company may be able to use FRS 105 if it qualifies as a micro-entity and chooses to apply the micro-entities regime, but being newly formed does not automatically make it eligible. Eligibility is assessed against the size conditions and the other rules and exclusions that apply, and a first accounting period can raise its own questions, for example around the length of the period and how the company's activity is measured. It is worth reviewing the position before the first set of accounts is prepared, because the framework chosen shapes both the figures and the disclosures from the outset and can influence how later periods are presented.