FRS 105 or FRS 102 §1A: which should you use?

In short: Use FRS 105 if the company qualifies as a micro-entity, isn't in an excluded category, and you don't need valuations or fuller notes. Use FRS 102 Section 1A if the company is above the micro-entity limits, is excluded from the micro-entity regime (a charity, for example), or wants to show property at fair value or give readers more detail. A micro-entity may choose Section 1A; a company outside the micro-entity regime can't choose FRS 105 (Companies Act 2006 s.384B; FRC: FRS 102).

This guide is about the choice. For the contents of each set of accounts, see what goes in micro-entity accounts and what goes in FRS 102 small company accounts.

How do FRS 105 and FRS 102 Section 1A compare at a glance?

FRS 105 and FRS 102 Section 1A differ in who may use them, how assets are measured, how many notes the accounts need and what reaches the public register. FRS 105 is simpler and keeps more off the record; Section 1A allows fair values and fuller notes. The table sums up the differences for a private company that could use either.

Sources: Companies Act 2006 s.384A, s.382, s.384, s.384B, s.396, s.415, s.444, SI 2008/409 reg 3 and HMRC's XBRL guide. Each row is explained below.

Is my company small enough for FRS 105 or FRS 102 Section 1A?

A company is in a size band if it meets at least two of three tests: turnover, balance sheet total and average employees. The limits rose for financial years beginning on or after 6 April 2025, so use the column for the date your period began, not the date it ended (GOV.UK: preparing and filing Companies House accounts).

Three details change the answer more often than the numbers do:

• Balance sheet total means total assets, before deducting what the company owes.
• Turnover is scaled for a short or long period. The turnover limit is adjusted in proportion for a financial year that isn't 12 months; the other two limits are not.
• Size changes take two years. In its first year a company tests that year alone. After that, meeting or ceasing to meet the limits changes its size only when it happens in two consecutive years. A micro-entity that grows past the limits for one year can usually stay on FRS 105 for that year (s.384A for micro-entities; s.382 for small companies). For a financial year beginning on or after 6 April 2025, earlier years are retested as if the new limits had applied to them (SI 2024/1303 reg. 3).

The company size checker applies these limits to your figures.

Which companies can't use FRS 105?

Some companies small enough to be micro-entities still can't use FRS 105. Section 384B of the Companies Act 2006 excludes a company that, at any time in the year, was a charity, or was excluded from the small companies regime, or fell within certain financial categories. It also excludes most companies that are part of consolidated group accounts (s.384B).

If a company holds investments rather than trading, check the investment undertaking definition before choosing FRS 105. Being a community interest company is not an exclusion: see can a CIC file micro-entity accounts.

What changes in practice if you choose FRS 102 Section 1A?

Choosing Section 1A changes three things: how assets are measured, how much the notes must say, and whether the directors can rely on a presumption that the accounts are true and fair.

The true and fair view

Micro-entity accounts that contain the minimum required items are presumed to give a true and fair view, and the duty to add extra information doesn't apply (s.396(2A) and (6)). Section 1A accounts have no such presumption. If the required information isn't enough for a true and fair view, the directors must add what is needed in the accounts or the notes (s.396(4)). In practice, Section 1A asks the directors for more judgement.

Valuations, fair value and deferred tax

A micro-entity can't use the alternative accounting rules or the fair value rules (SI 2008/409 reg 3(1A)). Its property and equipment stay at cost less depreciation, and FRS 105 doesn't recognise deferred tax (FRC: FRS 105). A small company may carry tangible fixed assets at market value or current cost, and investment property at fair value (SI 2008/409 Sch 1 paras 32 and 39). FRS 102 also recognises deferred tax, including on a fair value gain.

This is one reason a small property company may choose Section 1A. The investment property accounts guide works through the same company under both standards.

Notes and the directors' report

A micro-entity needs only a short statutory list of notes: financial commitments, guarantees and contingencies, plus directors' advances, average employees and material off-balance sheet arrangements (SI 2008/409 reg 5A; s.413; s.411; s.410A). It doesn't need a directors' report (s.415(1A)).

Section 1A accounts carry the notes in Part 3 of Schedule 1, such as accounting policies and fixed asset movements, and the directors must prepare a directors' report (SI 2008/409 Sch 1 Part 3). For periods beginning on or after 1 January 2026, FRS 102 also lists minimum disclosures for small entities. These include related party transactions and notes on leases and current and deferred tax (FRC: FRS 102). The FRS 102 changes for 2026 guide lists them.

Directors' advances, credits and guarantees need disclosing under both standards. A loan repaid before the year end still counts (s.413).

What appears on the public record under each standard?

In 2026, both micro-entities and small companies may deliver only the balance sheet and notes to Companies House, leaving out the profit and loss account and the directors' report. This is called "filleted" accounts (s.444). What the public then sees depends on the standard.

• FRS 105: the balance sheet shows only lettered headings, such as fixed assets and current assets, with the short list of notes. Very little detail reaches the register.
• FRS 102 Section 1A: the balance sheet shows the Roman-numeral items too, such as stocks, debtors and cash (SI 2008/409 Sch 1). The fuller notes go with it, so accounting policies and fixed asset movements become public (GOV.UK: micro-entity, small and dormant company accounts).
• Abridged accounts are a Section 1A option that shortens the balance sheet and profit and loss formats. They need every member's consent and aren't available to a charity (SI 2008/409 Sch 1 para 1A).

From 1 April 2028, Companies House plans to accept accounts only through software in iXBRL, to end abridged accounts, and to require micro-entities and small companies to deliver their profit and loss account, with an option to opt out of its publication (GOV.UK announcement). None of this changes which standard you may use. The filleted, abridged or full accounts guide and the 2028 filing changes guide explain the filing options.

Does the choice change the CT600 or the tax bill?

It doesn't change the return. The company files the same CT600 either way, with its accounts and tax computation in iXBRL (HMRC's XBRL guide). The same tax rules apply under both standards, but the computation starts from the accounting profit, so check any figure that the two standards treat differently.

Two points need care. First, an unrealised fair value gain on investment property in Section 1A accounts isn't taxed when it appears; other assets, such as loans and derivatives, follow their own tax rules. A company pays Corporation Tax on a chargeable gain when it sells or disposes of the asset (GOV.UK: Corporation Tax when you sell business assets), so the computation takes the unrealised gain out. Second, deferred tax in FRS 102 accounts is an accounting amount, not Corporation Tax payable now. The Corporation Tax due is the figure in the computation and on the CT600. The CT600 and accounts matching guide explains how the two should agree.

Decision checklist: which standard should my company use?

Use FRS 105 only if the company passes every check below; otherwise use FRS 102 Section 1A if the company is small. Work through the questions in order. The first one that rules out FRS 105 settles the answer, and a company that passes them all can still choose Section 1A.

1. Is the company a public company, bank, insurer or other firm excluded from the small companies regime? If yes, neither FRS 105 nor Section 1A is available, and the company needs accounts outside the small companies regime.
2. Was it a charity at any time in the year? If yes, use FRS 102 Section 1A if the company is small, together with the Charities SORP and charity-law rules.
3. Is it a parent preparing group accounts, or a subsidiary included in consolidated accounts? If yes, use FRS 102 Section 1A.
4. Could it be an investment undertaking or financial holding undertaking? If it might be, check the definition before choosing FRS 105.
5. Does it meet two of the three micro-entity limits, under the two-year rule? If no, use FRS 102 Section 1A.
6. Do you want property or other assets at valuation or fair value? If yes, use FRS 102 Section 1A.
7. Will a lender, investor or buyer want fuller notes or a fuller public balance sheet? If yes, consider FRS 102 Section 1A.
8. None of the above? FRS 105 is available, with fewer notes and the least detail on the public record.

Not sure your company suits self-filing at all? Take the 30-second check to see whether Taxley fits your company.

How does Taxley handle each standard?

Taxley prepares either set of accounts with the Company Tax Return: FRS 105 micro-entity accounts for £39.95 and FRS 102 Section 1A small-company accounts for £129. You choose the accounts type when you start the return. See file micro-entity accounts online with your CT600 or FRS 102 small company accounts for what each route covers and its limits. The directors remain responsible for choosing the right standard.

Frequently asked questions

Can a micro-entity use FRS 102 Section 1A instead of FRS 105?

Yes. A company that qualifies as a micro-entity may choose FRS 102 Section 1A for a fuller set of accounts, for example to carry property at fair value. It must then apply FRS 102 as a whole, rather than adding selected FRS 102 figures to FRS 105 accounts (FRC: FRS 102).

Can a company above the micro-entity limits use FRS 105?

No. FRS 105 is only for companies that qualify as micro-entities and aren't excluded. Under the two-year rule, though, a micro-entity that goes over the limits for a single year can usually stay a micro-entity for that year (s.384A).

Can a small charity or group company use FRS 105?

Charities, companies outside the small companies regime, certain investment, financial holding, credit and insurance undertakings, and most companies in consolidated group accounts can't use the micro-entity regime, even if they are small enough (Companies Act 2006 s.384B).

Did the size thresholds change in 2025?

Yes. For financial years beginning on or after 6 April 2025, the micro-entity turnover limit rose from £632,000 to £1 million and the small-company limit from £10.2 million to £15 million. The balance sheet limits rose too. Employee limits stayed at 10 and 50 (GOV.UK: preparing and filing Companies House accounts).

Does FRS 102 Section 1A mean paying more Corporation Tax?

Not because of the label. The computation applies the same tax rules under both standards. A common difference, an unrealised fair value gain on investment property shown in FRS 102 accounts, isn't taxed until the property is sold (GOV.UK: Corporation Tax when you sell business assets).

This is general information for UK private companies, not an eligibility decision for a particular company. Check the exclusions and the size tests for each financial year before choosing a standard.