Micro-Company Accounts (FRS 105) Explained

If you run a very small UK limited company, you almost certainly qualify as a micro-entity and can prepare cut-down accounts under FRS 105. This is the simplest accounts framework in the UK, designed specifically for one- and two-person companies.

Who qualifies as a micro-entity

A company qualifies if it meets at least two of these size limits for the year (and the previous year, after the first):

• Turnover not more than £1,000,000
• Balance sheet total not more than £500,000
• Average number of employees not more than 10

These thresholds were uplifted from £632k / £316k / 10 for periods beginning on or after 6 April 2025. Earlier periods use the old limits.

Some companies are excluded — including charities, LLPs that are PIEs, financial services and members of certain groups.

What the accounts look like

FRS 105 micro-entity accounts are deliberately stripped down:

• Profit and loss account — single-page format with a small set of statutory line items.
• Balance sheet — abbreviated, with statutory notes shown as footnotes underneath.
• No directors report required.
• No cash flow statement required.
• No fair-value or revaluation accounting — assets at historical cost only.
• Disclosures limited to a short list (advances to directors, guarantees, off-balance-sheet items).

Only the balance sheet plus footnotes has to be filed at Companies House. The P&L can be kept private.

Filing — two destinations

1. Companies House — micro-entity accounts within 9 months of the year end (first accounts: 21 months from incorporation).
2. HMRC — full statutory accounts plus iXBRL tax computation and CT600 within 12 months of the period end. See Corporation Tax for small companies.

The two filings use the same underlying numbers but different formats and deadlines. Micro-entity accounts are tagged in iXBRL when filed to HMRC.

Why use FRS 105

• Less work — fewer disclosures, no fair value, no deferred tax (with limited exceptions).
• Privacy — P&L stays out of public Companies House records.
• Lower compliance cost — most micro-company software (including SoloKit) handles it end-to-end.

When NOT to use FRS 105

• You expect to raise external investment soon — investors usually want fuller FRS 102 accounts.
• You need to apply fair-value accounting (e.g. investment property at market value).
• You are approaching the size limits — switching framework later costs more than starting on FRS 102.

What to do

• Confirm eligibility against the two-of-three test for the period.
• Prepare the balance sheet and P&L on the FRS 105 templates.
• File the balance sheet at Companies House; file full accounts plus CT600 to HMRC.

For the related corporation-tax mechanics see Corporation Tax explained and CT600 vs MTD.

Update — 1 April 2028 reforms

From 1 April 2028, Companies House requires all UK companies to file accounts via commercial software, and small companies and micro-entities must file a profit and loss account (with an opt-out from publication on the public register). Web and paper accounts filing routes close on that date. See our full guide: Companies House Accounts Reforms 2028.