If you are a small business owner in the UK, you might have heard of micro entity accounts. These are basically a simplified way to tell the government how your business is doing without needing a 50-page report.
Following changes that took effect for financial years starting on or after 6 April 2025, the rules around who counts as a ‘micro’ business have changed significantly. The government has increased the thresholds, meaning thousands more businesses now qualify for this easier filing route.
In this guide, you’ll get to know:
- What are micro-entity accounts?
- How do I prepare micro-entity accounts?
- What if my company is dormant?
- And much more…
Let’s get into it!
What Are Micro-Entity Accounts?
Micro-entity accounts are simplified statutory accounts for the UK’s smallest companies, allowing them to file less information with Companies House and HMRC. This reduces administrative burden, offering benefits like audit exemption by using simplified formats (FRS 105).
HMRC has ensured that all companies pay company tax returns. However, the options are open for small businesses in the case of stature accounts. Submitting tax returns in a simplified format that we call a micro-entity account will help you to save time and energy.
During the financial year, if a company meets the following conditions, it is known as a micro-entity according to the Company Act 2006.
- The annual turnover must be more than £632,000.
- The balance sheet total must be more than £316,000.
- In the company for the whole year, the employees must be more than 10.
According to Small Company Regulations 2013, micro-entities are free from some requirement of financial reporting while they are preparing year-end company accounts. However, some businesses can’t apply for this exemption, this list includes the following:
- Financial Institutions like banks
- LLPs (Limited Liability Partnerships)
- Public Limited Companies
- Investment Undertakings
- Subsidiaries of parent companies
These new rules associates with small businesses are there to help and ensure that the requirements are not equally time-consuming for small businesses as they are for large businesses.
How Do Micro Entity Accounts Work In The UK?
Two separate systems matter:
- Companies House wants your annual accounts for the public record.
- HMRC wants accounts plus a Company Tax Return (CT600) if you’ve been asked to file one, even if you made a loss or owe no Corporation Tax.
So you might prepare one set of accounts, but you often end up submitting to both places.
How Do I Know If I Qualify As A Micro-Company?
The rules for micro entity accounts UK are based on three main criteria. To qualify, your business must meet at least two of the following conditions for two years in a row:
| Criteria | New Threshold | Old Threshold (Pre-April 2025) |
| Annual Turnover | Not more than £1,000,000 | £632,000 |
| Balance Sheet Total | Not more than £500,000 | £316,000 |
| Average Employees | 10 or fewer | 10 or fewer |
If your business is brand new, you can usually qualify in your first year if you meet these targets.
What Counts as Turnover and Balance Sheet Total For Micro Entity Accounts?
Turnover is your sales income for the year (not profit). The Balance Sheet total means total assets on the balance sheet (fixed + current assets).
If you’re hovering near the thresholds, it’s worth being careful because switching between micro and small affects what you can file and what becomes public.
What Is a Micro Entity Accounts Example?
Imagine a local coffee shop or a freelance graphic designer. They might have a turnover of £150,000 and employ 2 people. Their “balance sheet” (what the company owns versus what it owes) might be worth £40,000.
Because they meet at least two of the criteria (turnover under £1m and fewer than 10 staff), they can prepare micro entity accounts. Instead of a long report with 20 different notes, their accounts would simply show a basic balance sheet and perhaps a few mandatory footnotes about things like bank loans or director advances.
What Are the Advantages of Micro Entity Accounts?
- Lower Costs: Because they are simpler, accountants usually charge less to prepare them.
- Reduced Reporting: Unlike small companies, you are not required to prepare or file a Directors’ Report, further cutting down on your paperwork.
- Speed: They take much less time to prepare than full statutory accounts.
How Do I Prepare Micro-Entity Accounts?
Preparing these accounts involves gathering your records for the financial year and putting them into the FRS 105 format. Here are the preparation steps for micro entity accounts:
- Financial Records: Collect all business transactions, bank statements, and invoices for the financial year.
- Draft Accounts: Create a simplified Balance Sheet and a Profit and Loss account.
- Mandatory Disclosures: Include “minimum accounting items” as footnotes to the balance sheet, such as advances to directors and the average number of employees.
- Statutory Statements: The balance sheet must prominently state that the accounts were prepared in accordance with the micro-entity provisions.
- Approval: A director must sign the balance sheet on behalf of the board.
- Filing: Either through Companies House Web Filing or compatible accounting software (as part of the move to mandatory digital filing)
Where Should the Accounts be Submitted?
You need to submit your accounts in two different places:
Companies House
This is the public record. When you file micro entity accounts with Companies House, you currently only need to send the balance sheet. This helps keep your profit figures a bit more private from competitors. However, note that for accounting periods starting on or after 1 April 2027, micro-entities will be legally required to file their Profit and Loss account as well.
HMRC
When you file micro entity accounts with HMRC, they must be part of your Company Tax Return (Form CT600). HMRC always wants to see the full picture of your accounts, including the profit and loss, so they can calculate how much Corporation Tax you owe.
Important: The joint CATO service for filing simultaneously to both agencies will permanently close on 31 March 2026.
What Is the Deadline for Sending Micro Entity Accounts?
So, when should the accounts be submitted? For a private limited company:
- Companies House: Within 9 months after your financial year ends.
- HMRC: For most companies, the deadline is 12 months after the end of the accounting period it covers. But you must pay any Corporation Tax owed within 9 months and 1 day.
How to File Micro Entity Accounts with Companies House?
Step-by-step: Companies House filing
- Prepare micro entity accounts
Your accountant prepares FRS 105 compliant accounts based on your records. - Approve the accounts
The director must approve and sign off on the balance sheet. - Choose how to file
You can file through compatible accounting software. - Submit before the deadline
- First year: within 21 months of incorporation
- After that: within 9 months of your accounting year-end
Once filed, you’re done for Companies House. No tax calculation happens here. This step is about compliance and public record only.
Important: The joint CATO service for filing simultaneously to both agencies will permanently close on 31 March 2026.
How To File Micro Entity Accounts With HMRC?
HMRC is a separate filing, and this one is about tax, not public records.
What HMRC actually needs
HMRC does not accept the simplified balance-sheet-only version that is currently allowed at Companies House. They require:
- Full statutory micro entity accounts (still FRS 105)
- Profit and Loss Account
- Balance sheet
- Notes
- Corporation Tax Return (CT600)
This version stays private between you and HMRC.
Step-by-Step: HMRC Filing
- Prepare full micro entity accounts
These include figures that are not shown at Companies House. - Calculate corporation tax
Based on your taxable profit. - Complete CT600
This is your company tax return. - Submit via commercial software
HMRC is mandating the use of commercial software for all CT600 filings from 1 April 2026. - Pay corporation tax
Due 9 months and 1 day after your accounting year-end.
HMRC Deadlines (Important)
- Accounts + CT600: 12 months after year-end
- Tax payment: 9 months and 1 day after year-end
What Happens If I File Micro Entity Accounts Late?
Companies House Late Filing Penalties (Private Limited Companies)
If you file late, GOV.UK imposed these late filing penalties:
- up to 1 month late: £150
- 1 to 3 months: £375
- 3 to 6 months: £750
- more than 6 months: £1,500
HMRC Late Company Tax Return (CT600) Penalties
If your Company Tax Return is late, GOV.UK lists:
- 1 day late: £100
- 3 months late: another £100
- 6 months late: HMRC estimates your bill and adds 10% of unpaid tax
- 12 months late: another 10% of unpaid tax
And if you pay Corporation Tax late, HMRC charges interest from the day after it should have been paid (normally 9 months and 1 day after the accounting period ends).
Who Is Responsible for Submitting the Accounts?
Ultimately, the company directors are responsible. Even if you hire an accountant to do the heavy lifting, you are the one legally signing off to say the information is correct.
Who Can’t Submit Accounts as a Micro-Entity?
So, can any company submit micro-entity accounts? No. Not every small business can take the easy route. Certain companies are prohibited from preparing and filing micro-entity accounts. These include:
- Charities.
- Investment programs or financial institutions.
- Insurance companies.
- Public limited companies (PLCs).
- Parent companies that need to prepare group accounts.
If you are unsure about your company’s legal structure, it is always best to check your incorporation documents before choosing your filing method.
What If My Company Is Dormant?
If your company isn’t trading and has no significant transactions, it is considered “dormant.” You still have to file annual accounts and a Confirmation Statement with Companies House.
While you can currently file simplified “dormant accounts” consisting only of a balance sheet, this is changing. By April 1, 2027, all companies will be required to file a Profit and Loss account as part of their annual submission.
Important for 2026:
- Digital Shift: The free joint HMRC/Companies House filing service (CATO) closes on March 31, 2026.
- Identity Verification: From Spring 2026, the person filing these accounts must have their identity verified by Companies House.
- Tax: HMRC may confirm you don’t need to file a tax return if they are satisfied the business is inactive.
What Are the Downsides of Micro-Entities?
The main drawback is that banks or investors might find these accounts too simple. If you are applying for a large business loan, a bank might ask for “full” accounts because the micro version doesn’t give them enough detail to judge your creditworthiness. Also, you aren’t allowed to “revalue” assets like property to make your balance sheet look stronger under FRS 105.
What Is the Difference Between Micro Entity Accounts and Full Accounts?
The gap is significant. Small and Full accounts both require the preparation of a Director’s Report and complex disclosures on leases and revenue.
In contrast, micro entity accounts skip almost all of that. There is no requirement for a director’s report or a detailed breakdown of every single expense category. It is the “lite” version of company reporting.
What Is the Difference Between Micro Entity Accounts and Abridged Accounts?
This is a common point of confusion. Abridged accounts are for “small” companies (those bigger than micros but still under the small threshold). Abridged accounts allow you to hide certain details from the public record if all shareholders agree.
However, from 2027, the government is planning to scrap abridged accounts entirely to improve transparency. If you are a micro entity, you don’t really need to worry about this because the micro-entity regime (FRS 105) is already simpler than the abridged route.
Do I Need to Send Micro-Entity Accounts or Full Accounts?
If your limited company qualifies, micro entity accounts are usually optional, not mandatory. In other words, you can often choose between:
- Micro-entity accounts (simpler format and fewer disclosure notes)
- Full accounts (more detail, more notes, more “proper” looking to outsiders)
So how do you decide?
- Choose micro entity accounts if you want a simpler compliance route and your business is straightforward. GOV.UK confirms micro-entities can prepare simpler accounts and file less detail with Companies House.
- Choose full accounts if you’re applying for finance, bringing in investors, selling the business, or you just want stronger reporting internally (micro accounts can look too thin to banks).
Also, if your company is in a prohibited category, you cannot use the micro regime even if your numbers are small.
What Changes for Micro Entity Accounts from April 2027?
From 1 April 2027:
- Micro-entities will be required to file a copy of their balance sheet and profit and loss account (so more information becomes publicly available).
- Companies will no longer be able to file abridged accounts.
- Companies House accounts filing moves towards software-only filing, with paper routes closing and software required.
If you currently rely on minimal public disclosure, build that into your planning now.
What Are the Most Common Mistakes People Make with Micro Entity Accounts?
- Using the wrong threshold set (old vs new).
- Confusing Companies House filing with HMRC requirements.
- Missing the year-end chain reaction: accounts due, tax due, CT600 due.
- Delaying filing until the deadline week, which can trigger rejections and late filing penalties.
- Not preparing for 2026–2027: service closure, software-only filing, and more public disclosure.
A Quick “Micro Entity Accounts” Checklist You Can Actually Use
Before you file:
- Confirm the accounting period start date (so you use the right thresholds)
- Confirm you meet 2 of 3 micro conditions
- Prepare balance sheet, P&L, notes
- Insert the required micro-entity statement above the director’s signature
- File accounts at Companies House by the deadline
- Pay Corporation Tax by 9 months + 1 day (if due)
- File CT600 by 12 months after period end
- If you used the joint online filing service, plan the move before 31 March 2026
The Bottom Line
Micro entity accounts are a fantastic shortcut for small UK businesses to stay compliant without the stress of complex accounting.
Just keep in mind that the free filing tools are gone, so you’ll need the right software or a professional to help you bridge the gap.
How Accotax Can Help You Submit Micro Entity Accounts
At Accotax, we can take the entire micro entity accounts filing process off your plate, ensuring you stay compliant while you focus on growing your business.
We offer a range of packages designed to fit your unique needs!
Reach out, get an instant quote and let us help you stay compliant!
Disclaimer: All the information provided in this article on “What Are Micro Entity Accounts? 2026 Guide” including all the texts and graphics, is general in nature. It does not intend to disregard any of the professional advice.
