If you run a small limited company in the UK, one of the first decisions you face at year-end is what kind of accounts to file with Companies House: micro entity accounts or small company accounts. Both are legitimate options for smaller businesses, but they differ in how much financial detail you must disclose, what you file, and what they signal to lenders, suppliers and competitors.
Here is the short version: micro entity accounts are the simplest filing available — a basic balance sheet with minimal notes and no profit and loss account on the public record. Small company accounts show more, including your profit and loss. Which one you can use comes down to your company’s size against three statutory thresholds. This guide explains the differences, the current thresholds, and which option makes sense for your business.
From Paperwork to Peace of Mind – Trust Micro Entity Accounts.
Micro entity vs small company accounts: the key differences at a glance
| Feature | Micro entity accounts | Small company accounts |
|---|---|---|
| Qualifying thresholds (2 of 3) | Turnover ≤ £1m; balance sheet ≤ £500,000; ≤ 10 employees | Turnover ≤ £15m; balance sheet ≤ £7.5m; ≤ 50 employees |
| What you file at Companies House | Simplified balance sheet + minimal notes | Balance sheet + notes (P&L can be omitted from the public filing with members’ agreement) |
| Profit and loss on public record | No | Yes, unless abridged accounts are filed |
| Directors’ report | Not required | Required (though simplified) |
| Accounting standard | FRS 105 | FRS 102 Section 1A |
| Audit | Exempt in most cases | Exempt in most cases |
| Privacy | Maximum — turnover and profit hidden | Lower — more financial detail is public |
| Best for | Very small, simple companies that value privacy | Companies that want to show credibility to lenders and partners |
What are micro entity accounts?
Micro entity accounts are simplified financial statements designed for the UK’s smallest limited companies — the “bare minimum” reporting option Companies House allows. If you want the full picture, read our guide on what micro entity accounts are and how they work.
When you file micro entity accounts, you submit an abridged balance sheet showing what your company owns (assets) and owes (liabilities) at your financial year-end, plus a small number of mandatory notes. You do not file a profit and loss account, a directors’ report, or detailed notes on the public record.
This simplified regime was introduced in December 2013 to cut the administrative burden on Britain’s smallest businesses. It is based on EU-derived accounting rules and remains the least time-consuming filing option if you qualify.
What are small company accounts?
Small company accounts are a step up in detail and disclosure. Your company must prepare full accounts — balance sheet, profit and loss account, directors’ report and notes — under FRS 102 Section 1A. What you file publicly can be abridged: with the agreement of all members, a small company can omit the profit and loss account from its Companies House filing.
The trade-off is transparency. Anyone searching for your company at Companies House can potentially see your turnover, cost of sales and profit figures, giving lenders, suppliers and partners a clearer picture of how the business is performing. Many accountants recommend small company accounts for businesses that want to demonstrate credibility when applying for finance or tendering for contracts.
The thresholds: do you qualify as a micro-entity?
Eligibility comes down to three statutory tests. Your company qualifies as a micro-entity if it meets at least two of the following — and the figures you use depend on when your accounting period began:
| Test | Micro-entity (periods beginning on/after 6 April 2025) | Small company (periods beginning on/after 6 April 2025) |
|---|---|---|
| Annual turnover | £1 million or less | £15 million or less |
| Balance sheet total | £500,000 or less | £7.5 million or less |
| Average employees | 10 or fewer | 50 or fewer |
Important: these higher thresholds apply to accounting periods beginning on or after 6 April 2025. For earlier periods, the old limits apply — turnover of £632,000 or less and a balance sheet total of £316,000 or less for micro-entities (the employee test was unchanged). Check which set of rules covers your financial year before you file. For a step-by-step check, see our guide to who qualifies as a micro-entity.
Every micro-entity is technically also a small company, but not every small company is a micro-entity. In practice: if your limited company has a turnover of £1.2 million, you are too large to file micro entity accounts, but you still comfortably qualify as a small company.
Some companies cannot use the micro-entity regime whatever their size — including public limited companies, LLPs, charities and not-for-profits, banks and insurers, and companies that are part of an ineligible group. If any of these apply, you must file as a small company (or larger).
What do you actually have to file?
Both regimes share the same Companies House deadline: private limited companies must file within 9 months of their accounting reference date (6 months for public companies). What differs is the content:
- Micro entity: simplified balance sheet with prescribed line items, plus a handful of mandatory notes (for example, off-balance-sheet arrangements and employee numbers). No P&L, no directors’ report on the public record.
- Small company: full accounts must be prepared for members and HMRC. The public filing includes the balance sheet and notes; the P&L and directors’ report can be omitted from the public filing (abridged accounts) if all members agree each year.
Both micro-entities and small companies are usually exempt from a statutory audit — unless members holding at least 10% of shares demand one, or the company is in an ineligible group.
Will HMRC accept micro entity accounts?
Yes — but understand that HMRC and Companies House are separate organisations with different requirements. Companies House accepts your simplified micro entity filing as your public record. HMRC, however, needs full statutory accounts — including the profit and loss account — submitted in iXBRL format alongside your Company Tax Return (CT600).
So even if you file micro entity accounts publicly, you still prepare a full set of accounts for HMRC. The Company Tax Return is due within 12 months of the end of your accounting period (Corporation Tax itself must be paid within 9 months and 1 day). This catches many business owners off guard: the public filing is simplified, but the tax filing is not. Most accountants prepare both versions as a matter of course.
Which type of accounts should your company file?
This is not only about what you are allowed to do — it is about what makes sense for your situation.
Choose micro entity accounts if you:
- Want maximum privacy — competitors and customers cannot see your turnover or profit
- Run a straightforward limited company with simple finances
- Have no immediate need to impress lenders, investors or tender panels
- Want the lowest accountancy cost and the simplest filing
- Are a freelancer, contractor or small trades business operating through a limited company — see our notes on micro entity accounts for startups
Choose small company accounts if you:
- Want to demonstrate credibility to banks, suppliers or potential partners
- Are applying for finance — lenders almost always ask for fuller accounts anyway
- Are growing and expect to outgrow the micro-entity thresholds soon
- Operate in a sector where transparency wins work (for example, tendering)
- Prefer stakeholders to see the full financial picture
You are never required to file micro entity accounts just because you qualify. Filing small company accounts when you could have filed as a micro-entity is perfectly legitimate — and sometimes the smarter commercial choice.
What happens if you file the wrong accounts — or file late?
Companies House will reject accounts that do not meet its requirements, and you will get a notice explaining why. The danger is that correcting and resubmitting eats into your 9-month deadline — and a rejection that pushes you past the deadline still triggers a late filing penalty. The penalties for a private limited company are automatic and start the day after the deadline:
| How late | Penalty |
|---|---|
| Up to 1 month | £150 |
| 1 to 3 months | £375 |
| 3 to 6 months | £750 |
| More than 6 months | £1,500 |
File late two years running and the penalty doubles — up to £3,000. Filing the wrong type of accounts (for example, micro entity accounts when your turnover exceeded the threshold) can also draw questions from Companies House later, and HMRC will spot the discrepancy when your full accounts arrive with the tax return. Assess your company’s size honestly each year, and read up on the common mistakes in micro entity accounts before you submit.
Do you need an accountant to prepare your accounts?
You are not legally required to use one, but there is a reason most small company directors do. Micro entity accounts follow FRS 105 and small company accounts follow FRS 102 Section 1A — each with specific presentation rules — and getting it wrong means rejected filings, penalties, or an HMRC enquiry that costs far more than the accountant’s fee.
An accountant typically pays for themselves by keeping you compliant, spotting reliefs and allowances you would miss, preparing both the public filing and the HMRC version, and giving you year-round advice. If your business is very simple and you are comfortable with accounting software, you might manage the bookkeeping yourself — but as soon as things get slightly complicated (multiple income streams, assets, employees, VAT), professional help usually makes sense.
Frequently asked questions
Can I switch between micro entity and small company accounts each year?
Yes. You reassess eligibility every financial year against the thresholds for that period. Many companies file micro entity accounts one year and small company accounts the next as they grow — or switch to small company accounts deliberately to show lenders more detail.
Do micro entity accounts need an audit?
Not usually. Micro-entities are exempt from statutory audit provided they are not in an ineligible group and members do not demand one. The same broad exemption applies to most small companies.
Is my profit visible if I file micro entity accounts?
No. That is one of the main attractions: only a basic balance sheet appears on the public record, so your turnover and profit stay private. Small company filings can disclose significantly more.
What changed about the thresholds in 2025?
The company size thresholds were increased for accounting periods beginning on or after 6 April 2025. The micro-entity limits rose from £632,000 turnover / £316,000 balance sheet to £1 million / £500,000, and the small company limits rose from £10.2m / £5.1m to £15m / £7.5m. More companies now qualify for the simpler regimes.
Does filing micro entity accounts affect my Corporation Tax?
No. Your size classification changes what you file publicly, not how your tax is calculated. Corporation Tax is charged on your profits regardless of regime — and HMRC still requires full accounts with your Company Tax Return.
From Paperwork to Peace of Mind – Trust Micro Entity Accounts.
How we can help with your company accounts
At Micro Entity Accounts, we specialise in helping micro and small business owners navigate UK accounting requirements without the confusion or stress. As specialist micro entity accountants, we will work out whether micro entity or small company accounts make sense for your situation, prepare both your public filing and your HMRC submission, and make sure everything is submitted on time.
We explain things in plain English — no jargon, just straightforward advice that helps you make informed decisions. And if keeping costs down matters, take a look at our affordable micro entity accounts packages.
Call us on +44 20 3441 1258 or get in touch today for a fixed-fee quote.
Last reviewed: 18 October 2026
