FRS 105 Micro Entity Accounts in Wendover

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 what it must disclose in its financial statements. In practice it is a deliberately simple framework: historical cost accounting is the norm, revaluations and fair value adjustments are not permitted, deferred tax is not recognised, and the notes to the accounts are much shorter than under most other frameworks. FRS 105 applies when a company qualifies for the micro-entities regime and chooses to use it.

FRS 105 is intended for companies that qualify for the UK micro-entities regime and decide to apply it. Qualifying depends on the statutory size conditions as well as other eligibility rules and exclusions, so being a small company is not automatically the same as being a micro-entity. Some entities are excluded from the regime altogether, and the conditions are tested against the relevant figures for the accounting period. Because the rules need to be applied to your specific circumstances, it is worth checking your position before committing to the framework.

No. The micro-entities regime is optional. A company that qualifies can choose to apply it and therefore prepare FRS 105 Micro Entity Accounts, or it can prepare its accounts under a different framework, such as FRS 102 including Section 1A for small entities. What matters is that the choice is made deliberately and applied consistently: once a company adopts the micro-entities regime for a period, the requirements of FRS 105 need to be followed for that period rather than a mixture of frameworks.

For accounting periods beginning on or after 6 April 2025, a company generally needs to meet at least 2 of the 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. The conditions are assessed against the figures for the relevant period, and specific rules and exclusions can affect whether a company qualifies. Meeting the size thresholds on its own does not guarantee eligibility, so the criteria should always be applied carefully to your company's circumstances.

Both are UK financial reporting standards, but they suit different sizes of company. FRS 102 is the broader standard, with Section 1A providing a lighter regime for small entities; it allows more accounting options, such as revaluations, fair value measurement and deferred tax, and requires more extensive disclosures. FRS 105 is narrower and simpler, designed specifically for the micro-entities regime, with fewer policy choices and far less disclosure. The trade-off is straightforward: less detail and lower preparation effort, but also less flexibility in how the numbers are presented.

Most companies must file annual accounts with Companies House, and a company preparing under FRS 105 will file accounts based on those financial statements. It is worth being clear that the filing obligation comes from company law rather than from FRS 105 itself — the standard determines how the accounts are prepared, while the Companies Act requirements determine what has to be filed and when. Filing requirements can differ depending on the company's circumstances, so it is sensible to confirm exactly what applies to you rather than assuming the same treatment applies to everyone.

Yes, they are two distinct exercises. FRS 105 governs the preparation of the company's financial statements for the accounting period, and those accounts are filed with Companies House. A CT600 is a Corporation Tax Return submitted to HMRC, supported by tax computations that start from the accounting figures but then apply tax adjustments. A company can have both obligations, and they run on separate tracks with separate deadlines and separate recipients. Good bookkeeping and clear records make it much easier to keep the accounts and the tax return consistent with each other.

A newly incorporated company can prepare FRS 105 Micro Entity Accounts if it qualifies for the micro-entities regime for the period in question and chooses to apply it. The size conditions are tested against the relevant figures for that accounting period, and the usual rules and exclusions still apply, so a brand new company is not automatically within the regime. Many start-ups find the simpler reporting attractive, but it is worth reviewing the position before the first set of accounts is prepared to avoid changing framework part-way through.

As a starting point, we need a complete picture of the company's transactions for the period: bookkeeping or accounting records, bank statements, sales invoices and purchase receipts, payroll information if you employ staff, details of asset purchases and disposals, stock or work in progress where relevant, loan balances and director's loan movements, VAT records if registered, and share capital details. It also helps to have the previous year's accounts, any current filing deadlines you are aware of, and notes on anything unusual or one-off during the period. The more complete the records, the smoother the preparation of your FRS 105 Micro Entity Accounts will be.