FRS 105 Micro Entity Accounts in Winchester

FRS 105 is the UK financial reporting standard that applies to companies using the micro-entities regime. It is designed to be the simplest of the UK reporting frameworks, so the financial statements are shorter and more straightforward than those prepared under FRS 102. In practice, an FRS 105 balance sheet generally measures assets and liabilities on a simpler basis with fewer accounting policy choices and noticeably lighter disclosure requirements. It is a reporting framework, not a tax regime — the way you prepare your accounts and the way you calculate your Corporation Tax are separate matters.

FRS 105 is for companies that qualify for the UK micro-entities regime and then choose to apply it. 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 tests are applied using the relevant rules, which can take group and connected company considerations into account, and certain companies are excluded from the regime regardless of their size. Meeting the size conditions is necessary but does not on its own guarantee that the regime is available, so it is worth checking your position against the current criteria.

No. The micro-entities regime is an available accounting regime, not a mandatory one. A company that qualifies for it can generally choose to apply FRS 105, or it may instead prepare its accounts under another framework such as FRS 102, including the small companies provisions within it. Directors may prefer a different framework for a variety of reasons — for example, where the business needs revaluations, fair value information or more detailed disclosures for lenders or investors. The important point is that eligibility opens the door; it does not force you through it.

FRS 102 is the main financial reporting standard for UK companies and offers a range of accounting policy choices, including fair value measurement for certain items and a considerably larger set of disclosure requirements. FRS 105 is far more restricted. It generally requires simpler, cost-based recognition and measurement, permits little in the way of revaluation or fair value accounting, and asks for fewer notes to the accounts. As a result, FRS 105 financial statements tend to be shorter and quicker to prepare, but they give readers less information. If your company relies on revalued property figures or fair value disclosures, FRS 105 may not suit your circumstances.

Yes — where a company is required to file annual accounts, FRS 105 Micro Entity Accounts form the accounts that are filed. Micro-entity companies have historically been able to file a balance sheet with limited notes rather than the full set of statements, which is one of the practical attractions of the regime. Filing requirements are changing, though. Under reforms to UK company filing requirements, micro-entity and small companies are expected to have to file additional information, including profit and loss information, with limited exemptions. These changes are being introduced in stages, so it is worth checking the current guidance for your accounting period. Filing your accounts at Companies House is also separate from submitting a Confirmation Statement, which is a distinct annual filing.

Yes, they are two different things prepared for two different purposes. FRS 105 Micro Entity Accounts are the financial statements prepared under the micro-entities reporting framework and filed at Companies House. A CT600 is the Corporation Tax Return submitted to HMRC, which starts from your company's taxable profits rather than from the reported figures in the accounts as such. The accounts are usually the starting point for preparing the tax return, and adjustments such as disallowable expenses and capital allowances are then applied to arrive at the taxable figure. Because the two documents serve different audiences, the figures will not always be identical.

A newly incorporated company can generally use FRS 105 for its first set of accounts if it qualifies for the micro-entities regime for that period and chooses to apply it. In the first period the size tests are assessed using the relevant rules for a company that has not previously prepared accounts, and the same rules and exclusions that apply to established companies still apply. A new company also needs to think about its accounting reference date and when its first accounts are due at Companies House, and about registering for Corporation Tax and its first CT600. If you are unsure whether FRS 105 is the right framework for your first year, it is worth discussing before you start preparing the accounts.

Company filing requirements in the UK are being reformed, and the direction of travel is towards more information being filed at Companies House. For micro-entity and small companies, that is expected to include filing profit and loss information alongside the balance sheet, with limited exemptions in some circumstances, along with changes to how accounts can be filed and to other company filings. The changes are being brought in in stages rather than all at once, so the practical effect depends on your accounting period and company circumstances. If you currently file micro-entity accounts, it is sensible to review your approach with your accountant before your next year end so you are ready for whatever applies to you.