Micro-Entity Accounts Explained for Small Companies

Micro-entity accounts are a simplified form of annual accounts for the smallest companies. A company generally qualifies if it meets two of three limits: for years starting on or after 6 April 2025, turnover of £1 million or less, a balance sheet total of £500,000 or less, and no more than 10 employees on average.

Most owner-managed companies, from freelancers to small trades, fall well inside these limits. Micro-entity accounts mean less detail and fewer notes, but they are still statutory accounts with legal deadlines, and they do not change what HMRC needs for corporation tax. This guide explains who qualifies and what the accounts contain.

Key takeaways

• Micro-entities meet at least two of three size limits.
• The limits were raised for financial years starting on or after 6 April 2025.
• Micro-entity accounts need fewer notes and less disclosure.
• HMRC still needs accounts and a tax computation with your Company Tax Return.
• Some companies are excluded, whatever their size.

What micro-entity accounts are

Micro-entity accounts are annual accounts prepared under a simpler set of rules for very small companies. They consist mainly of a balance sheet and a profit and loss account with limited notes, and they are presumed by law to give a true and fair view. GOV.UK explains the options on its micro-entities, small and dormant companies page, and filing is covered on GOV.UK's file your accounts and tax return page.

Size limits compared

You need to meet at least two of the three. There are also rules about qualifying over consecutive years, so a single unusually large year does not necessarily take you out of the regime. Check the full conditions on GOV.UK.

Micro-entity vs small company accounts

Companies slightly above the micro limits usually prepare small company accounts, which follow a fuller accounting standard and include more notes. The practical differences for a micro-entity are fewer disclosures, simpler rules on some valuations, and a more compact set of accounts. Some directors choose small company accounts anyway, for example because a lender wants more detail. Whatever format you choose, the underlying bookkeeping has to be complete and accurate.

What the accounts show publicly

Annual accounts filed at Companies House are public, and anyone can view them online free of charge. One reason many small companies like micro-entity accounts is that they disclose less. Historically, small and micro companies could choose not to file their profit and loss account publicly, filing only the balance sheet. The Economic Crime and Corporate Transparency Act changes this over time, so the filing options are narrowing. Check Companies House guidance for the rules that apply to your next filing rather than relying on what you did last year.

Even when some information is not filed publicly, the full accounts still have to be prepared, approved by the directors and circulated to shareholders. Lenders, landlords and larger customers may also ask to see them. Keeping good bookkeeping through the year makes preparing them quicker and cheaper.

What HMRC still needs

Simplified accounts at Companies House do not simplify corporation tax. HMRC needs your Company Tax Return, a tax computation and accounts in the required digital format. Adjustments such as disallowed expenses and capital allowances are still worked out in full. The tax payment deadline is also separate — see our guide to the corporation tax payment deadline.

Checklist: preparing micro-entity accounts

1. Confirm the size test for this year and the previous year.
2. Check you are not excluded, for example as part of certain groups.
3. Close the books for the year, with bank accounts reconciled.
4. Prepare the balance sheet and profit and loss account under the micro-entity rules.
5. Include the required statements on the balance sheet and have a director approve the accounts.
6. Check current filing requirements with Companies House guidance.
7. File by the deadline, normally 9 months after the year end.
8. Prepare the Company Tax Return and computation for HMRC.

Worked example (illustrative example)

"Maple Row Studio Ltd", an invented illustrative example, is a two-person design company with a 31 March year end. For the year to 31 March 2026 it had turnover of £240,000, total assets of £65,000 and two employees.

Its financial year began on 1 April 2025, a few days before the new limits took effect, so the older limits apply to that year. The accountant checks both sets and finds the company comfortably within either, so the answer does not change. The company prepares micro-entity accounts, which are approved by the director and filed before the 31 December 2026 deadline. Separately, the accountant prepares the Company Tax Return with a full computation for HMRC. The company and figures are invented to show how the test is applied.

Common mistakes

• Assuming micro status without checking the size test for the right years.
• Using the wrong set of limits for a year that started before 6 April 2025.
• Thinking HMRC gets less because Companies House does.
• Treating simple accounts as optional: deadlines and penalties still apply.
• Ignoring filing changes announced by Companies House.

Get your accounts prepared properly

Our company accounts service starts from £350 per year and includes checking which accounts format your company can use. Our corporation tax service, from £250 per year, covers the HMRC side. See also our guides to company accounts deadlines and dormant company accounts.

Not sure whether your company is a micro-entity? Get in touch or see our pricing.