If you've ever stared at a Companies House form and wondered what FRS 105 actually is, you're in good company. They're not the catchiest names. But once you know what each one is for, choosing is genuinely simple.
Here's the plain English version.
The three standards, side by side
Every set of UK company accounts is prepared under one of these. They each set out what you need to include, what you can leave out, and how the numbers should look. Think of them as different-sized suits for different-sized companies.
You qualify if you meet at least two of these three:
The plain English bit: FRS 105 is the simplest standard there is. Fewer notes, less disclosure, a stripped-back balance sheet. You don't need to file a directors' report at Companies House and, until 1 April 2028, you don't need to file a profit and loss account either, so what's public is genuinely minimal.
Best if: you want the lightest-touch accounts that still keep you compliant, and you don't need fuller accounts for lenders, investors or anyone else looking in.
You qualify if you meet at least two of these three:
The plain English bit: FRS 102 1A is the small-company shortcut within full FRS 102. You get most of the simplifications small companies are entitled to — reduced disclosures, no cash flow statement — but the underlying rules are richer than FRS 105.
Best if: you're too big for the micro regime, you have shareholders or lenders who want to see more, or you'd rather present accounts that look a bit more grown-up.
You're here if your company is bigger than small, broadly:
The plain English bit: Full FRS 102 is the standard UK GAAP — everything's in there. Cash flow statements, full disclosure notes, deferred tax done in proper detail. More work, but it's what bigger companies need.
Best if: you're medium-sized or larger, you're part of a group that prepares full accounts, or you've chosen to step up voluntarily.
So how do you actually choose?
The honest answer: the rules choose for you. Your company sits in whichever size category fits — and your accounts follow. Here's how to work it out in under a minute.
- Check the two-out-of-three test for micro. Do you meet two of: turnover of no more than £1m, a balance sheet of no more than £500k, no more than 10 employees? If yes, FRS 105 is on the table.
- If not, try the small test. Two of: turnover of no more than £15m, a balance sheet of no more than £7.5m, no more than 50 employees? You're a small company — FRS 102 1A.
- If you're bigger than that, it's full FRS 102. No shortcuts — the full standard applies.
- Then ask: do I actually want the simplest option? Even if you qualify for FRS 105, you can choose to go up to FRS 102 1A if you'd prefer fuller accounts. Some directors do this for lenders, investors, or peace of mind.
A few things worth knowing
The thresholds got bigger. For accounting periods starting on or after 6 April 2025, the size limits went up by about 50%. So your company might have moved down a category recently — from small to micro, say — and unlocked simpler accounts in the process.
| Limit (no more than) | Before | Accounting periods starting on or after 6 April 2025 |
|---|---|---|
| Micro-entity turnover | £632k | £1m |
| Micro-entity balance sheet | £316k | £500k |
| Small company turnover | £10.2m | £15m |
| Small company balance sheet | £5.1m | £7.5m |
| Medium-sized company turnover | £36m | £54m |
| Medium-sized company balance sheet | £18m | £27m |
The employee limits didn't move: they are still 10, 50 and 250. The new limits were set by the Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024. The government estimated that around 113,000 companies and LLPs would move from small to micro, 14,000 from medium to small and 6,000 from large to medium. Moving from medium to small usually means a company can claim audit exemption as well.
The test runs over two years. You generally need to meet the limits for two consecutive years to be confident in a category. One bumper year on its own doesn't bump you up.
Some companies can't use FRS 105. Charities, LLPs in certain circumstances, and companies in a group with audit requirements have their own rules. Size isn't the only test for small companies either: a public company, or a banking or insurance company, can't use the small company rules however small it is, and nor can some companies that are part of a group. If you're unsure, your accountant will know.
Switching is allowed. If you've been using FRS 102 1A but now qualify for FRS 105, you can move down. And you can always step up the other way too.
FRS 102 itself changed in 2026. The Financial Reporting Council updated the standard for accounting periods starting on or after 1 January 2026. The two headline changes are new lease rules, which bring most leases onto the balance sheet, and a new model for recognising revenue. FRS 102 1A follows the same recognition and measurement rules as full FRS 102, so small companies are affected too, and they have some extra disclosures to give, including on related party transactions. FRS 105 has a revised revenue section too, but micro-entities still keep operating leases off the balance sheet.
The profit and loss account rule changes in April 2028. Today, micro-entities and small companies can leave the profit and loss account out of what they file at Companies House. From 1 April 2028 both will have to file it, with the option to opt out of having it published on the public register. Companies House hasn't yet confirmed how the opt-out will work. We cover the rest of the April 2028 changes in Companies House changes to filing in April 2028.
Tax Optimiser supports the two standards most small businesses use: FRS 105 and FRS 102 Section 1A. If that's you, we'll guide you through your accounts and your Companies House submission in plain English, with the right format applied automatically.
If you need full FRS 102, you'll want to work with your accountant directly — that's a heavier set of rules and best left to specialist software.
