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.
Who qualifies
A company is a micro-entity if it meets at least two of three thresholds for two consecutive years.
| Test | Threshold (FY 2024+) |
|---|---|
| Turnover | ≤ £1 million (rising to £1m from April 2025) |
| Balance sheet total | ≤ £500,000 (rising to £500k from April 2025) |
| Average employees | ≤ 10 |
A handful of companies are excluded regardless of size: charities, public companies, banks, insurers, certain partnerships and any group parent that prepares group accounts.
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 P&L go to HMRC and members.
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 (e.g. holding investment property) cannot use FRS 105.
When to upgrade to FRS 102 Section 1A
Move up to FRS 102 1A (small entities) when:
| Trigger | Reason |
|---|---|
| Investment property held | Need fair value through P&L |
| Share-based payments | Need IFRS 2 equivalents |
| Group structure | Required if group is small |
| External investor due diligence | Buyers expect FRS 102 |
| Deferred tax matters | E.g. timing differences material |
Final thoughts
FRS 105 keeps micro-entity compliance cheap, but consider whether the simpler picture suits your stakeholders. Pair this with our FRS 102 for UK SMEs article, the Companies House annual accounts guide, and the year-end checklist . The standard text is on the FRC website . See pricing for accounting software with FRS 105-ready filing.