FRS 105 Micro Entity Accounts in Staplehurst

FRS 105 is the UK financial reporting standard for companies that qualify as micro-entities and choose to apply the micro-entities regime. It is a simplified framework: accounts are generally prepared on a historical cost basis, assets are not revalued, fair value accounting is not used, deferred tax is not recognised and the disclosure requirements are much lighter than under fuller standards. In practice, an FRS 105 set of accounts is a balance sheet, a profit and loss account and a small number of notes. The point of the standard is to give the smallest companies a proportionate way to report, without losing the basic discipline of double-entry accounting and a clear statement of financial position.

FRS 105 is available to companies that qualify for the micro-entities regime and decide to apply it. For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of these 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 the size tests is not the whole story. Other rules and exclusions can apply depending on what kind of entity you are and how the company fits into a wider group, so eligibility should be confirmed against your own figures and structure rather than assumed. Qualifying also does not mean you must use it — it is a choice.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies can choose to apply it, in which case FRS 105 is the framework used to prepare the accounts. A qualifying company may instead prepare accounts under FRS 102, which offers more measurement options and fuller disclosure and can be more suitable where lenders, investors or a parent company expect a greater level of detail. Because the choice affects how the numbers are presented, it is usually worth discussing before the year end rather than after, and then applying the chosen framework consistently from one period to the next.

Both are UK accounting standards, but they are pitched at different sizes of company. FRS 105 is the micro-entity standard: simpler measurement, minimal disclosure and the shortest set of accounts. FRS 102 is the fuller framework, and its small-entity section still requires considerably more disclosure and permits options such as revaluation and fair value accounting, as well as recognising deferred tax. In practical terms, FRS 105 suits straightforward trading companies that mainly need to report their position accurately and economically. FRS 102 tends to be the better fit where the accounts are used for more demanding purposes, such as lending covenants, investment discussions or consolidation into a group.

Yes. A company that prepares FRS 105 Micro Entity Accounts still has an annual accounts filing obligation at Companies House, and those accounts form the basis of what is filed. Micro-entity companies currently benefit from reduced filing requirements, which typically means a balance sheet and limited notes rather than the full profit and loss account and directors' report. Filing the accounts is a separate exercise from the accounting itself, and separate again from anything sent to HMRC. It is also worth knowing that Companies House filing requirements for small and micro-entity companies have been changing, so it is sensible to check the current position each year rather than relying on how you filed last time.

Yes, they are two distinct deliverables. FRS 105 Micro Entity Accounts are the statutory financial statements prepared for the company and its members and filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, which is built on tax rules rather than accounting rules. That means the profit shown in the accounts is usually adjusted before tax is calculated — depreciation is added back and capital allowances claimed in its place, and items such as disallowable entertaining or non-deductible expenses are treated differently. Preparing both together means the differences are identified deliberately rather than discovered later.

It may be able to, provided it qualifies for the micro-entities regime and chooses to apply it. A newly incorporated company in its first accounting period has no comparatives to worry about, and if its turnover, balance sheet total and employee numbers are comfortably within the size conditions, FRS 105 is often a sensible starting point. That said, the size conditions are only part of the test — other eligibility rules and exclusions can apply, including where the company forms part of a group. The practical approach is to look at your expected first-year figures and your plans for the next few years, since switching framework later involves changing your comparatives.

Companies House has been moving towards software-only filing of accounts, and there are plans to require small and micro-entity companies to file more information than they have historically, potentially including the profit and loss account. The direction of travel is towards fuller, more digitally structured filings rather than the abbreviated versions many companies are used to. Because the detail and timing depend on final confirmation from Companies House, we do not quote specific dates or assume a particular format. We keep an eye on these developments so that accounts are prepared in a way that can be filed appropriately when the rules require it.