Filing micro-entity accounts under FRS 105
FRS 105 micro-entity accounts: simpler balance sheet, deemed true and fair, fewer disclosures.
FRS 105 is the UK accounting standard for micro-entities, designed to keep the smallest companies’ accounts as light as possible while still satisfying Companies Act reporting. A qualifying company files a one-page balance sheet and almost no notes, and the accounts are deemed by law to give a true and fair view. For the smallest limited companies and limited liability partnerships, it is usually the cheapest and quickest route to compliance, and it forms one part of the wider year-end and annual accounts process every company must complete.
Who qualifies
A company is a micro-entity if it meets at least two of three thresholds for two consecutive financial years (with a one-year grace period when a company first exceeds a limit).
| Test | Threshold |
|---|---|
| Turnover | not more than the current micro-entity limit |
| Balance sheet total | not more than the current micro-entity limit |
| Average number of employees | not more than 10 |
The turnover and balance-sheet thresholds were uplifted by the government in recent reforms, so always check the current rate against your accounting period before relying on micro-entity status. A handful of companies are excluded regardless of size: charities, public companies, banks, insurers, certain partnerships, and any group parent that prepares group accounts.
If you sit close to the boundary, it is worth reading our comparison of micro-entity versus small company accounts before you commit to a regime, because the choice affects every subsequent filing.
What the accounts contain
FRS 105 strips reporting back to the legal minimum.
| Statement | Required |
|---|---|
| Balance sheet | Yes (formatted to micro-entity layout) |
| Profit and loss account | Yes (very simple format) |
| Notes | Only directors’ advances and certain other minimums |
| Directors’ report | Not required |
| Cash flow statement | Not required |
| Comparatives | Yes |
The accounts filed at Companies House are even slimmer — just the balance sheet and the small number of required notes. The full accounts including the profit and loss account go to HMRC and to the company’s members. In practice this means a micro-entity prepares one set of figures but presents two different cuts of it: an abridged public filing and a fuller version for members and the tax return.
Recognition and measurement simplifications
FRS 105 deliberately removes accounting policy choices that smaller companies struggle with.
- No revaluation of property, plant or investment property — historic cost only
- No deferred tax
- No fair-value financial instruments
- No capitalisation of borrowing costs
- No share-based payment accounting
- No defined-benefit pension asset/liability disclosures
- Simplified leases
This makes the standard easier to apply, but creates a one-way ratchet — a company that needs revaluation or fair value (for example, holding investment property) cannot use FRS 105 and must move up a tier.
When to upgrade to FRS 102 Section 1A
Move up to FRS 102 Section 1A (small entities) when one of the following applies.
| Trigger | Reason |
|---|---|
| Investment property held | Need fair value through profit or loss |
| Share-based payments | Need IFRS 2 equivalents |
| Group structure | Required if the group is small |
| External investor due diligence | Buyers expect FRS 102 |
| Deferred tax matters | For example, timing differences are material |
The trade-off is that FRS 102 Section 1A brings back more disclosure and accounting judgement, so only step up when a genuine reporting need demands it. Our guide to FRS 102 for UK SMEs walks through what changes in practice.
Getting the filing right
Whichever regime you use, the deadlines are unforgiving: private companies must file with Companies House within nine months of the period end, and late filing triggers automatic penalties. Keep an eye on the wider calendar in our key filing deadlines for UK businesses, and work through a year-end checklist so nothing is missed before sign-off.
Final thoughts
FRS 105 keeps micro-entity compliance cheap, but consider whether the simpler picture suits your stakeholders — a lender or investor may want the fuller disclosure that only FRS 102 provides. Pair this with the Companies House annual accounts guide for the mechanics of submission. The standard text is on the FRC website . See pricing for accounting software with FRS 105-ready filing.