What is the difference between micro-entity and small company accounts?

Companies Act 2006, section 382(3): a company meets the small company qualifying conditions in a year in which it satisfies two or more of: turnover not more than £15 million; balance sheet total not more than £7.5 million; number of employees not more than 50. Section 384A(4) sets the micro-entity conditions on the same basis: turnover not more than £1 million; balance sheet total not more than £500,000; not more than 10 employees. In both, the balance sheet total is the aggregate of the amounts shown as assets, and the number of employees is a monthly average of persons employed under contracts of service.

Sections 382(2) and 384A(3): in a subsequent financial year, a company that meets or ceases to meet the conditions changes status only if that occurs in two consecutive financial years. Section 383 and section 384A(8): a parent company qualifies only if the group it heads qualifies as small.

The figures apply to financial years beginning on or after 6 April 2025 (S.I. 2024/1303, regulation 2(2)). They replaced £632,000 and £316,000 for micro-entities, and £10.2 million and £5.1 million for small companies (regulation 9).

Section 384 excludes public companies, certain financial firms and members of ineligible groups from the small companies regime. Section 384B shuts those companies out of the micro-entity provisions too, along with charities and some others.

SourcesThe law·Companies House

S.I. 2008/409, Schedule 1, paragraph 1(1): every balance sheet and profit and loss account must show the items in one of the formats in Section B. Paragraph 1(1A): a micro-entity need only show the items in one of the balance sheet formats in Section C, and the profit and loss account format in Section C. Section C lists eleven balance sheet headings in Format 1, and eight profit and loss lines.

Regulation 5A: nothing in Schedules 1 to 3 requires a micro-entity's accounts to contain notes, except the information required by Schedule 1, paragraph 57. Paragraph 57 covers the total of financial commitments, guarantees and contingencies not included in the balance sheet. Companies Act 2006, section 413 separately requires details of advances and credits to directors, and guarantees given on their behalf, in the notes.

Regulation 3(1A): Sections C (alternative accounting rules) and D (fair value accounting) in Part 2 of Schedule 1 do not apply to a micro-entity whose accounts use the micro-entity exemptions. FRS 105, Appendix III, paragraph A3.8: micro-entities are therefore only permitted to apply the Historical Cost Accounting Rules.

Section 415(1A): the duty to prepare a directors' report does not apply if the company qualifies as a micro-entity. GOV.UK says statutory accounts must include a directors' report unless the company is a micro-entity. Section 415A: a small company is entitled to the small companies exemption for its directors' report, which bears on its contents and filing.

FRS 105, Overview (iii): FRS 105 is based on FRS 102, but its accounting requirements are adapted to satisfy the legal requirements applicable to micro-entities and to reflect their simpler nature and smaller size.

SourcesThe law·GOV.UK·FRC

Section 393(1): the directors must not approve accounts unless they are satisfied that they give a true and fair view. Section 393(1A): for a micro-entity, where the accounts comprise only micro-entity minimum accounting items, the directors must disregard any provision of an accounting standard that would require additional information. Where the accounts contain an additional item, the directors must have regard to any provision of an accounting standard that relates to it.

Section 396(2A): the micro-entity minimum accounting items are presumed to give the true and fair view required by section 396(2). Section 396(4): if compliance with the regulations would not be enough to give a true and fair view, the necessary additional information must be given. Section 396(6) disapplies that for a micro-entity's minimum accounting items. FRS 102, paragraphs 1A.5 and 1A.6: a small entity's accounts must give a true and fair view, and it may need disclosures beyond Section 1A to do so.

SourcesThe law·FRC

Section 414(3): if the accounts are prepared in accordance with the small companies regime, the balance sheet must contain, in a prominent position above the signature, (a) for individual accounts prepared in accordance with the micro-entity provisions, a statement to that effect, or (b) otherwise, a statement that the accounts have been prepared in accordance with the provisions applicable to companies subject to the small companies regime. FRS 105's glossary defines the micro-entity provisions as provisions of the Act, or regulations under it, relating specifically to the individual accounts of an entity that qualifies as a micro-entity.

Companies House's model wording for a micro-entity: "The accounts have been prepared in accordance with the micro-entity provisions and have been delivered in accordance with the provisions applicable to companies subject to the small companies regime."

SourcesThe law·Companies House·FRC

The filing rule in operation is section 444 as legislation.gov.uk shows it at 6 April 2025. Section 444(1): the directors of a company subject to the small companies regime must deliver a copy of the balance sheet, and may also deliver a copy of the profit and loss account and the directors' report. Section 444(2A): where the balance sheet or profit and loss account is abridged, the directors must also deliver a statement that all the members have consented to the abridgement. Section 444(5): if the directors do not deliver the profit and loss account or the directors' report, the filed balance sheet must contain, in a prominent position, a statement that the company's annual accounts and reports have been delivered in accordance with the provisions applicable to companies subject to the small companies regime.

legislation.gov.uk also shows a new section 444, substituted by section 54 of the Economic Crime and Corporate Transparency Act 2023. Section 54 is in force only for specified purposes, and otherwise from a day set by regulations (section 219). The Economic Crime and Corporate Transparency Act 2023 (Commencement No. 7) Regulations 2026, made on 23 January 2026, bring into force only section 49 and Schedule 1.

SourcesThe law