Micro-entity accounts: contents, notes and example
Do micro company accounts yourself, line by line (UK, 2026)
In short: FRS 105 micro-entity accounts include a balance sheet, a profit and loss account and required notes, plus company details, director approval and relevant statements. In 2026, eligible companies can omit the profit and loss account from their Companies House copy. The full accounts for members and a required Company Tax Return still include it (Companies House guidance; HMRC accounts requirement).
Preparing the accounts is not the same as filing the public copy. This guide covers UK private limited companies using the micro-entity regime. Start with the contents checklist below; the existing video walks through a separate fictional company's figures.
| Recipient | What they receive in the usual audit-exempt micro-company case | What not to confuse |
|---|---|---|
| Members, including shareholders | Full accounts: balance sheet, profit and loss account, notes and relevant statements | The full accounts still need preparing even if the public copy is shorter |
| Companies House, under the current 2026 rules | Balance sheet, required notes and statements; the company can omit its profit and loss account | Filing here does not file a CT600 with HMRC |
| HMRC, when a Company Tax Return is required | Full statutory accounts with the CT600 and tax computation, normally in iXBRL | The public balance-sheet-only copy is not the full HMRC accounts attachment |
Sources: Companies House accounts guidance, sections 3, 4 and 9, Companies Act 2006 section 444 and HMRC's XBRL guide, section 4.5. The announced April 2028 changes are explained below, separately from today's requirements.
What is included in micro-entity accounts in 2026?
The core accounts are a balance sheet, a profit and loss account and the required notes, with company details, comparative figures and approval information. An audit-exempt company also includes the relevant exemption statements. A shorter Companies House copy does not remove the obligation to prepare the full accounts for members.
Use this micro-entity accounts checklist before approving the accounts:
- Company identification: name, registered number, registered office, UK registration jurisdiction and whether it is a private company limited by shares or guarantee. State if it is being wound up where applicable.
- Reporting information: year-end date, period covered, currency and any rounding used.
- Balance sheet: the company's assets, liabilities, capital and reserves at the year end, using a permitted micro-entity format.
- Profit and loss account: income, expenses, tax and the resulting profit or loss for the period.
- Comparatives: corresponding previous-year figures where there is a preceding financial year. Do not invent a previous year for first accounts.
- Notes: employee numbers and the other disclosures triggered by the company's circumstances, set out below.
- Approval and statements: board approval, the signing director's name and signature, and micro-entity and applicable audit-exemption statements. Include an auditor's report if an audit is required.
Company identification and the two primary statements are required by section 396; comparatives follow Schedule 1 paragraph 7. FRS 105 paragraphs 3.9 and 3.13 cover the complete set and its identification. A qualifying micro-entity does not need a directors' report under section 415(1A). A cash flow statement is not part of the minimum FRS 105 set.
Who can use FRS 105 micro-entity accounts?
A UK company can choose FRS 105 only if it qualifies for the micro-entity regime. Meeting two size limits is the starting point, not the whole test: the financial-year start date, two-year rules and excluded company types also matter. Qualifying companies may choose another appropriate framework instead.
| Size test | Period starts on or after 6 April 2025 | Period starts before 6 April 2025, within the earlier regime |
|---|---|---|
| Annual turnover | No more than £1 million | No more than £632,000 |
| Balance sheet total | No more than £500,000 | No more than £316,000 |
| Average employees | No more than 10 | No more than 10 |
Meet at least two of the three. Balance sheet total means total assets, not net assets after deducting debts. Adjust the turnover limit proportionately for a financial year shorter or longer than 12 months; do not scale the other two limits. In the first financial year, test that year. Subsequently, meeting or ceasing to meet the size conditions generally changes classification only after two consecutive years (section 384A).
Charities, public companies and certain financial or group companies are excluded even if their figures are small enough. The official eligibility guidance lists the exclusions. Use the company size checker for the thresholds and the FRS 105 versus FRS 102 Section 1A guide for the choice of framework.
The accounting-period date also matters for the standard. The FRC's Periodic Review 2024 amendments apply for periods beginning on or after 1 January 2026, with early application permitted. They are separate from the April 2025 size-threshold change and the April 2028 filing reforms. Check the FRC's current FRS 105 edition and amendments for the period you are preparing.
What is the micro-entity balance sheet format?
A micro-entity balance sheet uses one of two statutory formats. Format 1 presents assets and liabilities in a sequence ending in capital and reserves; Format 2 separates assets from capital, reserves and liabilities. Both describe the financial position at the year end, rather than the year's income and expenses.
The headings below follow SI 2008/409, Schedule 1, Part 1, Section C. The plain-English explanations are a reading aid, not additional statutory headings.
| Format 1 heading | What it means |
|---|---|
| A Called-up share capital not paid | Share capital called for but not yet paid |
| B Fixed assets | Assets held for continuing use, such as equipment and property |
| C Current assets | Items such as stock, debtors and cash |
| D Prepayments and accrued income | Costs paid ahead and income earned but not yet received, where separately presented |
| E Creditors: amounts falling due within one year | Short-term amounts owed by the company |
| F Net current assets or liabilities | Current assets and relevant prepayments, less current liabilities |
| G Total assets less current liabilities | Fixed assets plus net current assets, allowing for other relevant asset headings |
| H Creditors: amounts falling due after more than one year | Longer-term amounts owed |
| I Provisions for liabilities | Recognised liabilities with uncertain timing or amount |
| J Accruals and deferred income | Costs incurred but not yet paid and income received ahead, where separately presented |
| K Capital and reserves | The shareholders' interest, including share capital and accumulated profits or losses |
Omit a heading only if there is no amount in either the current or previous year; show the comparative where one exists. Format 2 must distinguish creditors due within one year from those due later. The comparative figures guide explains how to use the previous accounts without treating missing figures as zero.
FRS 105 does not permit an ongoing property revaluation or fair-value accounting model, and it does not recognise deferred tax. Property and equipment are generally carried at cost less accumulated depreciation and impairment. A company choosing FRS 102 Section 1A instead must follow that framework consistently, not add selected FRS 102 figures to micro-entity accounts (FRC: FRS 105, paragraphs 2.38 and 24.7). If you are still deciding between the two, the FRS 105 or FRS 102 Section 1A decision guide sets out who can use each and what changes.
Do micro-entity accounts show a profit?
Yes. The full micro-entity accounts include a profit and loss account, even when the company leaves it out of its Companies House filing. Members receive the full accounts, and HMRC requires them with a Company Tax Return. A balance-sheet-only public record therefore does not mean the company prepared no profit and loss account.
The statutory micro-entity profit and loss format has eight headings:
| Heading | What it shows |
|---|---|
| A Turnover | Revenue from the company's ordinary activities |
| B Other income | Income outside turnover |
| C Cost of raw materials and consumables | Materials and consumables used |
| D Staff costs | Employee costs |
| E Depreciation and other amounts written off assets | Charges reducing asset carrying amounts |
| F Other charges | Other expenses, such as rent, insurance and professional fees |
| G Tax | The current tax charge or credit |
| H Profit or loss | The period's result after tax |
Source: SI 2008/409, Schedule 1, Part 1, Section C. A separate gross-profit or operating-profit subtotal is not required by this format. Dividends are not staff costs or an expense in this profit and loss account: they reduce reserves when recognised as distributions.
Accounting profit is not automatically taxable profit. Tax adjustments and capital allowances belong in the separate tax computation; see how to calculate Corporation Tax. For most UK companies filing a return, HMRC requires the accounts and computation in iXBRL, alongside the CT600. Filing accounts at Companies House does not complete that submission.
What changes for micro-entity accounts from April 2028?
Companies House has announced that from 1 April 2028 micro-entities must deliver their profit and loss account and file accounts through commercial software. They will be able to opt out of publication of the profit and loss account. Sending it to Companies House and making it publicly visible are therefore different questions.
The announcement also includes a strengthened audit-exemption eligibility statement. Details of the profit-and-loss publication opt-out remain to be confirmed in the official announcement. Do not treat the future filing requirement as a reason to omit the profit and loss account from the full accounts today, or assume it must automatically become public. See the 2028 Companies House filing changes guide.
What notes do micro-entity accounts need, and where do they go?
FRS 105 identifies four main disclosure categories for UK micro-entities: employee numbers, directors' advances and guarantees, financial commitments, and material off-balance sheet arrangements. Present the required notes at the foot of the balance sheet. These are categories to check, not a rule that every company must print exactly four notes.
| Disclosure | When to include it | What to check |
|---|---|---|
| Average employees | Every company, including one with no employees | Calculate the annual average; state zero if that is the actual result |
| Advances, credits and guarantees for directors | An arrangement existed at any time during the year | Amounts, interest, terms, repayments, write-offs and waivers; guarantee terms and liabilities where relevant |
| Financial commitments, guarantees and contingencies | Relevant amounts are not included in the balance sheet | Totals and security; separately identify the required pension and group-related commitments |
| Off-balance sheet arrangements | The company was party to arrangements whose risks or benefits are material at the year end | Nature and business purpose, to the extent needed to assess the financial position |
The statutory sources are section 411, section 413, Schedule 1 paragraph 57 and section 410A, respectively. FRS 105 paragraph 6.2 brings them together at the foot of the balance sheet.
A repaid director's loan can still need disclosure. Section 413 covers arrangements that existed at any time during the year, not just the closing balance. A £3,000 advance repaid before year end must not disappear from the note solely because nothing remains owed. Include the required totals as well as the terms. See the director's loan account guide.
Employee numbers are not simply the headcount on the last day. Add each month's number of people employed under contracts of service and divide by the number of months in the financial year. A director counts for this calculation if employed under a contract of service; being a director alone does not automatically make the answer one (section 411(3)-(4)).
A general accounting policies note and a fixed-asset movement note are not part of the minimum micro-entity disclosures under regulation 5A. Not required does not mean prohibited. Additional disclosures may be included, but must be prepared consistently with the applicable requirements. Our notes to the accounts guide explains the distinction between mandatory disclosures and extra presentation.
Which statements and signature must a micro-entity balance sheet carry?
The board must approve the accounts, and a director signs the balance sheet on its behalf. The micro-entity statement appears prominently above that signature. If the company claims audit exemption, the balance sheet also needs the relevant exemption and responsibility statements; being small enough for FRS 105 does not itself guarantee audit exemption.
Check the statements against section 414 and section 475:
- Accounts prepared under the micro-entity provisions.
- The applicable audit exemption, commonly section 477 for an eligible small company or section 480 for a qualifying dormant company.
- Members have not required an audit under section 476.
- Directors acknowledge their responsibilities for accounting records and preparing accounts.
The audit statements belong above the signature too. The Companies House copy must name the director who signed the accounts. Use the actual board approval date and check the filing copy before submitting; a blank signature field or an inaccurate exemption statement is not fixed by correct arithmetic.
What does a worked micro-entity balance sheet look like?
The fictional Example Studio Ltd illustrates Format 1 at 31 March 2026, with a previous-year column. Its figures are invented and rounded to whole pounds. This is a reading example, not a complete set of accounts or a filing template; the real accounts also need company identification, approval information and all applicable disclosures.
Its year starts on 1 April 2025, so the earlier £632,000 turnover and £316,000 asset limits apply, despite the 2026 year end. Assume it qualifies in the preceding year too, has no excluded activities and is entitled to claim audit exemption. Turnover is £84,000, total assets are £38,000 and average employees are one. Unpaid share capital, prepayments and provisions are nil in both years, so those headings are omitted.
| Format 1 item (illustration) | 31 March 2026 (£) | 31 March 2025 (£) |
|---|---|---|
| B Fixed assets | 6,000 | 4,000 |
| C Current assets | 32,000 | 21,000 |
| E Creditors: amounts falling due within one year | (14,000) | (10,000) |
| F Net current assets | 18,000 | 11,000 |
| G Total assets less current liabilities | 24,000 | 15,000 |
| H Creditors: amounts falling due after more than one year | (5,000) | (7,000) |
| J Accruals and deferred income | (1,000) | (1,000) |
| Total net assets | 18,000 | 7,000 |
| K Capital and reserves | 18,000 | 7,000 |
Read the current-year column in this order:
- Total assets: £6,000 + £32,000 = £38,000. This is the amount used for the size test, not the £18,000 net-assets figure.
- Net current assets: £32,000 - £14,000 = £18,000.
- Total assets less current liabilities: £6,000 + £18,000 = £24,000.
- Net assets: £24,000 - £5,000 - £1,000 = £18,000, agreeing to capital and reserves.
The movement in capital and reserves also needs explaining. Assume unchanged share capital, no other equity movements, £21,000 profit after tax and £10,000 dividends recognised in the year. Then £7,000 opening capital and reserves + £21,000 - £10,000 = £18,000 closing capital and reserves. These illustrative inputs are not a Corporation Tax calculation. The rise in reserves is neither turnover nor necessarily the company's cash balance.
For this example, the notes would explain:
- Average employees: 1, with a prior-year comparative of 1; the director is assumed to be employed under a contract of service.
- A £3,000 interest-free director's advance, repayable on demand, fully repaid during the year, with nothing written off or waived and no closing balance.
- Equipment lease commitments of £4,000 not recognised on the balance sheet, compared with £6,000 in the prior year; assume no security or other commitments requiring separate disclosure.
Assume there are no other arrangements requiring a section 410A note. The approval block must still carry the applicable statements described above. The Companies House copy can omit the profit and loss account under the current rules; the full members' and HMRC accounts cannot omit it merely for that reason.
What should you check before filing micro-entity accounts?
Check that the accounts are complete, internally consistent and addressed to the correct recipient before you submit them. A balancing balance sheet is only one check: eligibility, comparatives, disclosures, approval and the tax-return attachments still matter. Check both the full accounts and the Companies House copy, rather than assuming they are identical.
- Do the figures reconcile? Net assets must agree to capital and reserves. Explain the movement in reserves using profits, dividends and any other equity changes.
- Are any liabilities missing or double-counted? Check tax, unpaid bills, loans and accruals; do not include the same accrual in two headings.
- Are the comparatives genuine? Use the previous accounts and investigate changes; do not enter zeros just to fill a field.
- Are the notes complete? Repaid director's advances, employee averages and commitments are easy to overlook.
- Is the correct filing copy selected? Omitting the profit and loss account from Companies House is not permission to omit it from a required HMRC return.
- Are dates and approval complete? Check the period, board approval, signing director and relevant statements.
For an ordinary private company's subsequent accounts, the Companies House deadline is normally nine months after the accounting reference date. First accounts and shortened periods have special rules. Check the company's registered deadline and the official filing guidance; the Corporation Tax deadline calculator helps keep tax payment and return dates separate.
How does Taxley prepare and file micro-entity accounts?
Taxley prepares FRS 105 micro-entity accounts with a CT600 and tax computation for £39.95 per return. It files the full accounts with the return to HMRC and offers Companies House filing from the paid, finished return. It does not sell a standalone accounts-only filing, and directors remain responsible for the figures and disclosures.
The accounts use Format 1, with share capital and the profit and loss reserve shown separately. You enter the company figures, approval information, employee average and applicable notes, then review the generated documents before paying. Companies House filing uses the company's authentication code and is included in the return fee; it is a separate submission from the HMRC return.
Check the disclosure limits before choosing this route. Taxley prints the directors' advances, commitments and secured-debts notes you enter, without checking their legal completeness. It currently has no dedicated off-balance sheet arrangements note field. If your company requires a disclosure the generated accounts cannot include, do not submit an incomplete set. Taxley also does not file confirmation statements.
For the supported workflow and other limits, see file micro-entity accounts online with your CT600. Ready to check whether your company fits? Check your company's suitability for Taxley. If you only need Companies House accounts, the CT600 package may not be the right purchase.
Frequently asked questions
Can micro-entity accounts show property at market value?
FRS 105 does not allow an ongoing fair-value or revaluation model for investment property. It generally uses cost less accumulated depreciation and impairment. A qualifying company can choose FRS 102 Section 1A instead, but must apply that framework consistently rather than mixing its rules with FRS 105.
Is an accounting policies note needed in FRS 105 accounts?
A general accounting policies note is not part of the minimum micro-entity disclosures. That does not ban an additional note. Employee numbers and any required directors' advances, commitments and material off-balance sheet disclosures still need checking; a voluntary policies note does not replace them.
Are micro-entity accounts public?
The accounts filed at Companies House are publicly accessible. In 2026, an eligible micro-entity can omit its profit and loss account from that copy. From April 2028, the announced rules require delivery of the profit and loss account, with an option to opt out of its publication.
Does a micro-entity need a directors' report?
No. Section 415(1A) of the Companies Act 2006 exempts a qualifying micro-entity from preparing a directors' report. The board must still approve the accounts, and a director must sign the balance sheet. The relevant statements and notes are still required.
Can I prepare micro-entity accounts myself?
Yes. Companies House does not require you to use a professional accountant. You must still prepare compliant accounts, confirm the company's eligibility and meet the separate filing obligations. Software can assemble documents from your figures, but it does not transfer the directors' responsibility for their accuracy.
Do micro-entity accounts need a cash flow statement?
No. The minimum FRS 105 set comprises a balance sheet with its required notes and an income statement, also called the profit and loss account. A cash flow statement is not required. You still need proper accounting records; a bank statement alone is not a set of accounts.
Checked against official sources on 9 October 2026. This is general information for UK private companies, not advice or an eligibility decision for a particular company. The worked example is fictional and is not a complete filing template.
Video transcript
Read the full transcript of “Do micro company accounts yourself, line by line (UK, 2026)” (7:39)
Example company and figures are fictional. General information, not tax advice.
0:00 Intro
Filing your company's accounts and tax return yourself for the first time? This two-part series goes through every line. Part 1 is the accounts: what each line means, and where its number comes from.
0:16 What do you need before you start?
First, gather bank statements to the year end, sales invoices, receipts, payroll records, last year's accounts, the company's UTR and company number. Our example, Kestrel Lane Holdings, is a design consultancy. Its director, Priya, is its only employee. It files micro-entity accounts, the simplest kind, and it's far below the size limits shown here.
The accounts have two main parts. The profit and loss account covers the whole year: what the company earned, less what it spent. The balance sheet is a snapshot on the last day: what the company owns and owes. Profit the company keeps is added to its reserves on the balance sheet, which is why the two connect.
1:04 How do you start the return?
Sign in to Taxley with your email and password. Then, from your dashboard, start a new return. This page sets it up. Pick the company; on your first return, choose "A new company" and look it up. Then the accounting period: choose 1 April 2025 to 31 March 2026, not last year's. Kestrel sells a service, so it's Trading, with micro-entity accounts. The charity box is only for charities. Continue.
Check the company card: the UTR must be the company's ten-digit tax reference, not your personal one. Stay in Simple view.
1:46 What goes in the profit and loss account?
This is the profit and loss account: the year's income, its costs, and the profit left over. You can import a trial balance from your bookkeeping software here, then check every line. We'll type ours. Turnover comes from your sales invoices: everything invoiced in the year, paid or not. Kestrel's March invoice for £5,700 was still unpaid at the year end, but it counts, making £68,400. If you're VAT-registered, leave out the VAT; Kestrel isn't.
Interest income is bank interest, and other income covers things like grants. Raw materials are for businesses selling goods. None apply here, so leave them blank. Staff costs come from your payroll: salaries, including the director's, plus employer's National Insurance and employer pension contributions. For Priya, that's £13,706. Forgetting the National Insurance is a common slip. The next two go in faster. Depreciation spreads the cost of something kept for years: Kestrel's laptop cost £1,800 and should last three years, so it charges a third each year, £600, not the whole cost.
Other charges are all the other running costs: software, accountancy, travel, insurance, phone, and £400 of client entertaining, at its real cost; the tax side comes in Part 2. Taxley adds it up: income, less expenses, gives a profit before tax of £48,134. The right-hand column holds the comparatives, copied from last year's accounts; Taxley doesn't fill them in: turnover, staff costs, other charges and last year's tax. Don't leave it empty; only a company in its first year chooses "There's no earlier year".
This year's tax line has no box: Taxley fills it in from your tax computation, covered in Part 2. That needs two tax adjustments, entered here now and explained there. Now the tax is final, and so is the profit for the year.
4:00 What goes on the balance sheet?
The balance sheet shows what the company owned and owed on 31 March 2026. This badge tells you whether it balances. Fixed assets, like the laptop, go in at cost less depreciation: £1,800 less £600 is £1,200. Current assets are Kestrel's debtors, that unpaid invoice, plus £18,174 of cash, which must match the bank statement on the last day of the year. The Simple view takes one total.
"Show all lines" adds lines most companies leave blank: share capital not paid, for shares the owners haven't paid for yet; prepayments, like insurance paid ahead for next year; provisions, for debts of uncertain timing or amount; and accruals and deferred income. None apply here, so leave them blank. Creditors due within one year is what the company owes within twelve months, apart from Corporation Tax: for Kestrel, £600 for this year's accountancy, billed after the year end.
That's an accrual, so it could go in either line. Enter it once. Corporation Tax owed is Taxley's figure, from the computation. Leave it. Creditors due after more than one year are long-term debts, like a bank loan. Blank here. Share capital is £100. Last year's column comes from last year's balance sheet: current assets, creditors, Corporation Tax, share capital and retained earnings. Now it doesn't balance: it's £30,000 out. If yours doesn't balance, check each figure against your records; Taxley never forces it.
Here, it's retained earnings, which Taxley works out: last year's, plus this year's profit, less dividends. Kestrel paid Priya exactly that in dividends. They come out of profit after tax, so they're not an expense: never put them in other charges. Other reserve movements stay blank. Now it balances. Net current assets are current assets, less what's owed within a year, here £14,280.54. Add the laptop and take off any long-term debts, and you get net assets: £15,480.54.
That equals share capital plus retained earnings, which is what balancing means.
6:27 Which notes and statements do micro accounts need?
These details are printed in your accounts, so check them. The approval date, from your board minutes, is when the directors approved the accounts: 15 September 2026, not today's date. For average employees, count everyone with a contract of employment. Priya has one, so it's one. Did a director borrow from the company?
As an example, Yes asks more, and the accounts then need a note about it. Only fill this in if it applies to you — and if it does, it isn't optional. Kestrel answers No. The same goes for commitments or guarantees not on the balance sheet. Then the declaration: Priya, as director, who also signs the accounts. Above the director's signature, Taxley adds the statements micro accounts need: no audit needed or asked for, the directors' responsibilities, and the micro-entity rules. Save.
That's Kestrel's accounts done, and they balance. In Part 2, we turn them into the tax return, and file.
Update history
- Taxley's new prices for returns with micro-entity and small-company accounts
- Added filing comparison, disclosure checklist and checked worked-example calculations
- Companies House filing live since 28 September 2026; limits clarified
Spotted something out of date? See how we handle corrections.
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