FRS 105 Micro Entity Accounts in Tadworth

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 recognises and measures its assets, liabilities, income and expenses, and it keeps those rules deliberately simple — typically a historical cost basis, no revaluation of fixed assets, no fair value accounting and no deferred tax. It also reduces the number of notes and disclosures that accompany the financial statements, which is why FRS 105 Micro Entity Accounts are shorter and more streamlined than accounts prepared under a fuller framework.

FRS 105 is available to companies that qualify for the UK 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. Other eligibility rules and exclusions can apply, so meeting the size conditions does not automatically mean a company qualifies. The position should be reviewed for each company and each accounting period.

No. Being eligible for the micro-entities regime does not force a company to use it. Qualifying companies can choose the regime and therefore prepare FRS 105 Micro Entity Accounts, or they can prepare their accounts under a different framework instead. The choice often comes down to whether the simplified measurement and disclosure rules suit the business — for example, a company that wants to revalue a property or apply fair value accounting would need a different framework, because FRS 105 does not permit those treatments.

Both are UK accounting standards, but they are aimed at different sizes of company. FRS 105 is the micro-entities standard and offers the lightest set of requirements: simpler measurement rules and very limited disclosures. FRS 102 is the fuller standard, and the reduced version often used by small companies still allows more accounting options — such as revaluation of fixed assets, certain fair value measurements and deferred tax — along with more extensive notes. In short, FRS 105 trades flexibility for simplicity, while FRS 102 gives you more choice and more disclosure.

Accounts prepared under the micro-entities regime are generally filed at Companies House by companies that are required to file. Micro-entity accounts are filed in the simplified form the regime allows, which typically means a balance sheet with limited notes rather than a full set of statements, and the filing arrangements follow the company's own accounting reference date. Whether your company must file in a given period, and exactly what needs to be included, depends on your circumstances, so it is worth confirming the position rather than assuming.

Yes, they are two different things. FRS 105 Micro Entity Accounts are the company's financial statements, prepared under the micro-entities regime and used for reporting and filing purposes. A CT600 is a Corporation Tax Return submitted separately to HMRC to report the company's taxable profits and work out the tax due. Preparing FRS 105 accounts does not itself settle the company's Corporation Tax position, and the figures in the accounts may need adjusting for tax purposes. Both obligations can apply to the same company and are handled through different channels.

It depends on the company's circumstances rather than its age. A newly incorporated company can use the micro-entities regime if it meets the applicable eligibility conditions and chooses to apply it, and the same size conditions — turnover, balance sheet total and average employee numbers, generally meeting at least 2 of the 3 for periods beginning on or after 6 April 2025 — are the starting point. Because a new company has no trading history, the assessment is usually forward-looking and may need revisiting in later periods. Other rules and exclusions can still affect whether the regime is available.

In broad terms, we need a complete picture of the company's transactions and balances for the period. That usually means bookkeeping or accounting software access, bank and cash records, sales and purchase information, payroll details, records of assets bought or sold, stock or work in progress where relevant, and details of any loans, directors' balances or amounts owed to and by the company. Prior year accounts and any relevant correspondence are helpful too. The cleaner and more complete the records, the more smoothly the FRS 105 Micro Entity Accounts can be prepared.

The framework around company reporting and filing does evolve, and the way accounts are prepared, filed and presented has been the subject of ongoing reform in the UK. Rather than relying on a fixed summary that may go out of date, the sensible approach is to review the position for your company each year and prepare the accounts in line with the rules and filing arrangements in force at that time. If you would like certainty about how current requirements apply to your Tadworth company, we can go through it with you.