A micro-entity is the smallest size of UK company for accounts purposes: one that meets at least two of turnover up to £1 million, a balance sheet total up to £500,000 and no more than 10 employees. Micro-entities can prepare simpler accounts under FRS 105.
The thresholds
For financial years beginning on or after 6 April 2025, a company is a micro-entity if it meets at least two of these:
| Test | Limit |
|---|---|
| Turnover | £1 million or less |
| Balance sheet total | £500,000 or less |
| Average employees | 10 or fewer |
Some companies cannot be micro-entities whatever their size, such as investment undertakings, charities and certain financial companies.
What it means for the accounts
Micro-entity accounts are prepared under FRS 105: a simplified balance sheet and profit and loss account with a small number of notes, and no requirement to show fair values. A micro-entity is usually exempt from audit. Today it only has to file the balance sheet with Companies House; from 1 April 2028 it will also have to deliver its profit and loss account.
Read more: FRS 105 vs FRS 102 Section 1A.