Micro-Entity Accounts – The Complete UK Guide
Micro-entity accounts are the simplest form of statutory accounts available to UK limited companies. If your business qualifies as a micro-entity, you can prepare shorter, less complex accounts with significantly reduced disclosure requirements.
This guide explains what micro-entity accounts are, who is eligible, what must be included, how filing works, and the latest position on profit disclosure at Companies House — making this a one-stop resource for company directors and small business owners.
What Are Micro-Entity Accounts?
Micro-entity accounts are statutory company accounts prepared under the micro-entity regime (FRS 105). This regime is designed for the smallest UK companies and allows for:
Simplified financial statements
Minimal statutory notes
No requirement to include a director’s report
Audit exemption in most cases
They are still full legal accounts and must comply with the Companies Act, even though they contain far less information than standard small company accounts.
| Criteria | Micro‑Entity | Small Company |
|---|---|---|
| Annual Turnover | £1,000,000 or less | £15,000,000 or less |
| Balance Sheet Total | £500,000 or less | £7,500,000 or less |
| Average Number of Employees | 10 or fewer | 50 or fewer |
| To qualify as either a micro‑entity or a small company, a company must meet at least two of the three criteria above for its accounting period. | ||
These thresholds apply for accounting periods beginning on or after 6 April 2025. Always check the rules that apply to your specific accounting period before preparing accounts.
| Criteria (2 of 3 must be met) | Pre‑6 April 2025 | Post‑6 April 2025 |
|---|---|---|
| Micro‑Entity – Annual Turnover | £632,000 or less | £1,000,000 or less |
| Micro‑Entity – Balance Sheet Total | £316,000 or less | £500,000 or less |
| Micro‑Entity – Average Employees | 10 or fewer | 10 or fewer |
| Small Company – Annual Turnover | £10.2 million or less | £15 million or less |
| Small Company – Balance Sheet Total | £5.1 million or less | £7.5 million or less |
| Small Company – Average Employees | 50 or fewer | 50 or fewer |
| To qualify as a micro‑entity or a small company, a business must meet at least two of the three criteria shown above for the relevant accounting period. | ||
The pre‑6 April 2025 thresholds applied to accounting periods starting before that date. The new thresholds for periods beginning on or after 6 April 2025 raise the monetary limits significantly. These changes were introduced to reduce administrative burden and account for inflation since the prior thresholds were set.
Who Can Prepare Micro-Entity Accounts?
A company qualifies as a micro-entity if it meets at least two of the following three conditions for the relevant accounting period:
Turnover does not exceed the applicable micro-entity threshold
Balance sheet total does not exceed the applicable micro-entity threshold
Average number of employees is 10 or fewer
Thresholds have increased in recent years, meaning more companies now qualify as micro-entities. However, the thresholds that apply depend on the start date of your accounting period, so this must always be checked before preparing the accounts.
Companies That Cannot Use the Micro-Entity Regime
Even if the size thresholds are met, certain companies are excluded from using micro-entity accounts, including:
Charitable companies
Public companies
Certain financial institutions and regulated entities
Companies that are members of ineligible groups
If your company is part of a group or has complex transactions, professional advice is strongly recommended.
What Do Micro-Entity Accounts Include?
Micro-entity accounts are intentionally minimal. In most cases, they include:
1. Balance Sheet
The balance sheet is the primary statutory document and must:
Be prepared in the prescribed micro-entity format
Show total assets, liabilities, and capital
Be signed by a director on behalf of the board
This balance sheet is always filed at Companies House.
2. Profit and Loss Account
A profit and loss account is prepared as part of the company’s accounts, showing:
Turnover
Expenses
Profit or loss for the year
Whether the profit and loss account is filed publicly at Companies House depends on current filing requirements for the accounting period (see the disclosure section below).
3. Minimal Notes to the Accounts
Only a small number of notes are required, typically covering:
Accounting policies
Guarantees, commitments, or contingencies (if any)
Advances, credits, or guarantees to directors (if applicable)
No detailed breakdowns are required under the micro-entity regime.
4. Director’s Statement
A standard statement confirming that the accounts have been prepared in accordance with the micro-entity provisions of the Companies Act and FRS 105.
Simple Example: Micro-Entity Accounts Structure
A typical micro-entity accounts pack will look like this:
Cover page
Balance sheet (signed by a director)
Profit and loss account
Notes to the accounts
Director’s statement
Although simple, the figures must still be accurate and supported by proper accounting records.
| Description | £ |
|---|---|
| Fixed Assets | 0 |
| Current Assets | 12,340 |
| Creditors: Amounts falling due within one year | (2,500) |
| Net Current Assets | 9,840 |
| Total Assets Less Current Liabilities | 9,840 |
| Capital and Reserves | 9,840 |
| Description | £ |
|---|---|
| Turnover | 35,000 |
| Cost of Sales | (8,000) |
| Gross Profit | 27,000 |
| Administrative Expenses | (16,000) |
| Operating Profit | 11,000 |
| Tax on Profit | (2,200) |
| Profit After Tax | 8,800 |
These accounts have been prepared in accordance with FRS 105 and the micro-entity provisions of the Companies Act 2006.
Signed on behalf of the board: ____________________________
Date: ____________
Audit Exemption
Most micro-entities qualify for audit exemption.
An audit is not required unless:
Shareholders holding at least 10% of shares formally request one
The company’s articles require an audit
The company is otherwise excluded from audit exemption
Even when audit-exempt, the accounts must still give a true and fair view.
Filing Micro-Entity Accounts
Companies House
Micro-entity accounts must be filed at Companies House by:
9 months after the accounting period end (for most companies)
21 months after incorporation for a first set of accounts
Companies House filings are public record.
HMRC (Corporation Tax)
Companies House filing does not replace HMRC obligations.
You must also submit:
A Company Tax Return (CT600)
Full statutory accounts
Corporation tax computations
These are submitted separately to HMRC.
Profit Disclosure at Companies House – Important Update
What Was Proposed
The government announced reforms aimed at increasing transparency of UK company filings. One major proposal was to require small and micro-entity companies to file a profit and loss account at Companies House, making profit figures publicly visible.
Historically, many small companies only filed a balance sheet, keeping profit figures private.
Current Position
The position has evolved following consultation and industry feedback:
Some proposals were delayed or revised
Profit disclosure requirements may vary depending on:
Accounting period start date
Filing method used
Transitional rules in force at the time
As a result, directors should not assume that profit will remain private.
Practical Advice for Directors
Always check the filing requirements that apply to your specific accounting period
Be prepared to file a profit and loss account publicly if required
If confidentiality is a concern, discuss whether preparing fuller accounts under a different regime is more appropriate
An accountant can confirm whether profit disclosure applies before submission.
Advantages of Micro-Entity Accounts
Lowest level of statutory disclosure
Simpler and quicker to prepare
Lower professional fees in most cases
Suitable for owner-managed businesses
When Micro-Entity Accounts May Not Be the Best Choice
Micro-entity accounts may not be suitable if:
You need to present detailed financial information to banks or investors
You want more flexibility in accounting treatment
You prefer greater control over what appears on public record
Your company is close to the size thresholds
In these cases, small company accounts under FRS 102 may be more appropriate.
Common Mistakes to Avoid
Using the wrong accounting regime
Applying incorrect size thresholds
Forgetting to sign the balance sheet
Missing filing deadlines
Assuming profit will never appear publicly
These mistakes can lead to late filing penalties or rejected submissions.
Micro-Entity Accounts vs Small Company Accounts
This comparison helps directors quickly decide which accounting regime is right for their business.
Micro-Entity Accounts
Designed for the smallest companies
Prepared under FRS 105
Very limited disclosures
Simple balance sheet format
Minimal notes required
Usually lower preparation cost
May result in profit figures being publicly visible depending on current filing rules
Best suited to owner-managed companies with straightforward finances
Small Company Accounts
Prepared under FRS 102
More detailed financial information
Greater flexibility in accounting treatments
More notes and disclosures
Often preferred for banks and lenders
Can provide more control over how information is presented
Suitable for growing companies or those seeking finance
Key takeaway:
If your business is simple and cost-efficiency is the priority, micro-entity accounts are often ideal. If you need credibility with lenders or more flexibility, small company accounts may be the better option — even if you qualify as a micro-entity.
| Feature | Micro-Entity Accounts | Small Company Accounts |
|---|---|---|
| Accounting Standard | FRS 105 | FRS 102 |
| Disclosures | Minimal statutory notes | Comprehensive notes and policies |
| Audit Requirement | Usually exempt | May be required depending on thresholds |
| Profit Disclosure | May be public depending on Companies House rules | Profit is part of full accounts, public by default |
| Cost & Complexity | Low – simple preparation | Higher – detailed preparation |
| Ideal For | Small owner-managed companies with simple finances | Growing companies, companies seeking funding or investors |
Micro-Entity Accounts Prepared by Qualified Accountants
Preparing micro-entity accounts may look straightforward, but small errors can lead to rejected filings, penalties, or unnecessary public disclosure.
When your accounts are prepared by a qualified accountant, you benefit from:
Confirmation that your company genuinely qualifies as a micro-entity
Correct application of size thresholds for the accounting period
Accurate preparation under FRS 105
Clear advice on whether profit figures must be filed publicly
On-time filing with Companies House
Correct submission of accounts and corporation tax return to HMRC
Many directors come to us after their accounts have been rejected or flagged due to incorrect formatting, missing signatures, or applying the wrong regime.
Our micro-entity accounts service typically includes:
Statutory micro-entity accounts
Balance sheet review and director approval
Corporation tax return (CT600)
Full compliance checks before submission
Filing with Companies House and HMRC
This ensures peace of mind and protects your company from avoidable compliance issues.
Frequently Asked Questions
Do I have to use micro-entity accounts if I qualify?
No. Directors can choose to prepare fuller accounts even if the company qualifies as a micro-entity.
Are micro-entity accounts accepted by banks?
They are legally valid, but banks often request fuller accounts or management information.
Are micro-entity accounts enough for HMRC?
They meet Companies Act requirements, but HMRC still requires full accounts and tax computations with the company tax return.
Can an accountant prepare micro-entity accounts for me?
Yes. Most directors use an accountant to ensure compliance, correct disclosure, and timely filing.
What are micro-entity accounts?
Micro-entity accounts are simplified statutory accounts for the smallest UK companies, prepared under FRS 105 with minimal disclosure requirements.
Who qualifies for micro-entity accounts?
A company qualifies if it meets at least two of the following: low turnover, low balance sheet total, and 10 or fewer employees, subject to the accounting period thresholds.
Are micro-entity accounts public?
The balance sheet is always public. Whether profit figures are publicly available depends on current Companies House filing rules for the relevant accounting period.
Do micro-entity accounts include a profit and loss account?
Yes, a profit and loss account is prepared as part of the accounts. Whether it must be filed publicly depends on current disclosure requirements.
Are micro-entity accounts audit-exempt?
Most micro-entities are audit-exempt unless shareholders request an audit or the company is otherwise excluded.
Can I choose small company accounts instead?
Yes. Directors can choose to prepare fuller small company accounts even if the company qualifies as a micro-entity.
Are micro-entity accounts acceptable for HMRC?
Yes, but HMRC also requires a corporation tax return and tax computations. Filing at Companies House does not replace HMRC obligations.
Should I use an accountant for micro-entity accounts?
Most directors do. An accountant ensures eligibility, correct disclosure, compliance with changing rules, and timely filing.
Final Thoughts
Micro-entity accounts are a powerful simplification for eligible UK companies, but they must still be prepared carefully and in line with current filing rules.
With changing disclosure requirements and Companies House reforms, directors should always confirm:
Eligibility thresholds
Public disclosure rules
Filing deadlines
Getting this right protects your company, avoids penalties, and ensures full compliance.