Access the standard
All editions of FRS 105 can be found on the FRC’s website. Note the September 2024 edition of FRS 105 includes some amendments with a mandatory effective date that is later than 1 January 2024. Find details of the effective dates of amendments in the Recent amendments section below.
Summary
FRS 105 is a single accounting standard for use by entities that are eligible for, and choose to apply, the micro-entities regime. It is based on ‘FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland’, although it has been adapted to accommodate the legal requirements of the micro-entities regime, for example, the prohibition on revaluing or subsequently measuring assets or liabilities at fair value. Further simplifications have also been made to reflect the nature and size of micro-entities. For example, no deferred tax or equity-settled share-based payment amounts are recognised and accounting choices set out in FRS 102 are removed.
The standard comprises 28 sections, each dealing with a specific area of accounting. FRS 105 requires that micro-entities prepare a balance sheet and profit and loss account, however other primary statements are not required. The standard requires only limited disclosures.
Who may apply the standard?
FRS 105 is applicable to entities that are eligible for, and choose to apply, the micro-entities regime.
An entity meets the qualifying conditions for a micro-entity if it meets at least two out of three of the following thresholds:
- Turnover not more than £632,000 (adjusted for periods longer or shorter than 12 months)
- Balance sheet total not more than £316,000
- Average number of employees not more than 10.
After the first financial year of the entity, the criteria must be met in two consecutive years for an entity to qualify as a micro-entity and must be exceeded in two consecutive years to cease to qualify.
Any entity that is excluded from the small companies regime (or small LLPs regime) may not apply FRS 105. In addition the following types of entity are excluded from being treated as a micro-entity:
- charitable companies;
- investment undertakings;
- financial institutions;
- subsidiaries that are fully consolidated in group accounts; and
- parent companies that prepare group accounts.
Upcoming changes to company size thresholds
From 6 April 2025, legislation will come into effect to increase company turnover and net assets thresholds by approximately 50%. This uplift in thresholds accounts for inflation since the previous thresholds were set and is also part of the government’s drive for more proportionate reporting. Companies able to move down a size category will be entitled to the accompanying reduction in reporting requirements.
Which version of the standard?
| Annual period | Relevant edition of the standard | Notes on amendments and early adoption |
|---|---|---|
| Starts on or after 1 January 2026 | FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (September 2024) | This edition of FRS 105 incorporates all amendments issued up to September 2024, including the Periodic Review 2024 amendments, which are mostly effective from 1 January 2026. An entity will also apply the amendments in respect of UK company size thresholds, effective from 6 April 2025. |
| Starts on or after 6 April 2025 | FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (January 2022) | An entity will apply the January 2022 edition of FRS 105, plus:
|
| Starts on or after 1 January 2024 | FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (January 2022) | An entity will apply the January 2022 edition of FRS 105, plus:
|
| Starts on or after 1 January 2022 | FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (January 2022) | This edition of FRS 105 incorporates all amendments issued up to January 2022. |
Note
Care will need to be taken to apply the correct version of FRS 105, as the updated September 2024 edition includes significant amendments, most of which are not effective until accounting periods beginning in 2026.
Recent amendments
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The ‘Preparing and filing Micro-entity accounts’ factsheet considers simplifications available to micro entities, including an overview of FRS 105 requirements and the criteria to be met.
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