How to file Micro-Entity Accounts – A Small Guide!

Micro-entity accounts are a simplified set of annual accounts available to the smallest UK companies. A company qualifies if it meets at least two of three limits for two years running: turnover of £1 million or less, a balance sheet total of £500,000 or less and 10 employees or fewer. They have fewer disclosures than standard small company accounts, which saves time and cost.

This guide explains who can use micro-entity accounts, what they include, how they differ from small company accounts, the benefits and drawbacks, and how filing rules may change. For help preparing your accounts, see our micro-entity accounts filing service and our limited company packages.

The micro-entity limits

A company must meet at least two of these three criteria. The limits were raised for accounting periods starting on or after 6 April 2025, from the earlier £632,000, £316,000 and 10. A company that has exceeded the limits for a year may still qualify until it has failed the tests for two consecutive years.

Who cannot use micro-entity accounts?

• Certain financial and regulated companies, such as investment undertakings and credit institutions.
• Some companies that are part of a group, depending on the group structure.
• Charities and other organisations that follow different accounting rules.
• Companies that choose to file full or abridged small company accounts instead.

If you are not sure, ask your accountant to check your status before you file.

What do micro-entity accounts include?

Micro-entity accounts use the simplified rules in FRS 105, the accounting standard for the smallest companies. They typically include a simplified balance sheet, a simplified profit and loss account for tax and your own records, and a short set of notes. They must show a true and fair view and include the statement that they are prepared in accordance with the micro-entity provisions. The format is much shorter than a full set of accounts.

Key features

• Simplified balance sheet with fewer line items.
• Reduced disclosures in the notes, such as for employee numbers, advances to directors and guarantees.
• No need for a directors’ report in many cases.
• Choice of accounting policies is limited, for example no revaluation of fixed assets or fair value adjustments.

Micro-entity vs small company accounts

Benefits of micro-entity accounts

• Lower cost. Simpler accounts mean less preparation time.
• Less public information. Fewer disclosures are on the public record.
• Simplicity. Easier for directors to understand.
• Consistency with tax. The tax computation can start from the same figures.

Drawbacks to consider

• Lenders, investors and customers may want more detail than a micro-entity set provides.
• The limited accounting options, such as no revaluation of property, can reduce balance sheet values.
• Companies planning to grow past the limits will need to change format.
• Filing rules are being updated, so check current Companies House requirements before you file.

How to prepare and file micro-entity accounts

1. Confirm eligibility by checking turnover, balance sheet total and employee numbers for the year and the previous year.
2. Keep your books up to date and reconciled.
3. Prepare the accounts in the micro-entity format, with the correct statements and notes.
4. Approve and sign the balance sheet by a director.
5. File with Companies House within 9 months of the year end (or 21 months from incorporation for the first accounts, in many cases).
6. File the CT600 with HMRC within 12 months, using the accounts for tax.

Read our company accounts and deadlines guide for the full timetable and penalties.

A simple micro-entity balance sheet

This shows the layout rather than a real company. A micro-entity balance sheet condenses balances into a few lines and is supported by simple notes.

Micro-entity accounts for London companies

Many London freelancers, contractors, consultancies and small shops run through small companies that fall within the micro-entity limits, which makes the simplified accounts a cost-effective choice. If you plan to raise finance, apply for a mortgage or bid for contracts, check whether the recipient prefers more detailed accounts. We prepare micro-entity accounts for companies in every borough. See our Camden, Ealing and Croydon pages, or the full list of limited company accountants by borough.

Common mistakes with micro-entity accounts

• Assuming a company qualifies without checking all three limits and the two-year rule.
• Using micro-entity accounts when a lender or investor wants more.
• Missing required statements on the balance sheet.
• Not checking updated Companies House rules before filing.
• Leaving filing until the deadline.

Does the tax computation change for a micro-entity?

The Corporation Tax computation starts from the profit in the accounts and adjusts it for tax rules, so micro-entity status does not change how much tax you pay. What does change is the accounting treatment of certain items, such as fixed assets and deferred tax, because FRS 105 has simpler rules. Your accountant will make sure the tax computation reflects these correctly. Capital allowances are claimed in the same way as for any other company.

When should a micro-entity choose fuller accounts?

Consider small company accounts instead if a bank, investor or major customer has asked for more detail, if you hold properties or investments that you want shown at fair value, or if you are about to grow beyond the limits. Filing fuller accounts is allowed and can make the business look more transparent. It costs more, so weigh the benefit against the extra preparation fee.

Planning ahead for growth

If your turnover is approaching £1 million or your headcount is rising towards 10, plan for the move to small company accounts before it happens. That gives you time to improve bookkeeping, set up management reports and talk to your accountant about disclosures and tax. Moving up is a good sign, as long as you are prepared.

Next steps

If you think your company qualifies, ask your accountant to confirm your eligibility, show you what the accounts will look like and check whether any lender or customer needs more. A short conversation before year end avoids last-minute surprises and means your filing is ready well before the deadline.

Quick checklist

Confirm you meet two of the three limits for two years, check whether any lender or investor needs more detail, prepare the simplified balance sheet and notes, and file with Companies House by the deadline. Our micro-entity accounts filing service can handle it for you.

Frequently asked questions

What are micro-entity accounts?

A simplified format of annual accounts for the smallest companies, prepared under FRS 105 with reduced disclosures.

What are the micro-entity limits?

Turnover of £1 million or less, a balance sheet total of £500,000 or less and 10 employees or fewer, meeting at least two of three.

Do micro-entities need an audit?

Generally no. Micro and small companies are usually exempt from audit.

Can I choose to file full accounts instead?

Yes. A company that qualifies can still choose small company or full accounts if it prefers more detail.

Where do I file micro-entity accounts?

With Companies House, and the tax return goes to HMRC. We can prepare and file both for you.