FRS 105 or FRS 102 Section 1A? Choosing the Right Framework, with Pro Forma Accounts
Most UK private companies prepare accounts under one of two standards: FRS 105 for the smallest companies, or FRS 102 (often its Section 1A small-entity regime) for everyone else. The choice affects how much you disclose, how your assets are valued and what lenders and investors can see.
Step 1: check your size
A company qualifies for a size category if it meets two of the three limits below, for two consecutive years. These thresholds apply to financial years beginning on or after 6 April 2025.
| Category | Turnover | Balance sheet total | Average employees | Framework |
|---|---|---|---|---|
| Micro-entity | ≤ £1m | ≤ £500k | ≤ 10 | FRS 105 (or FRS 102 1A) |
| Small | ≤ £15m | ≤ £7.5m | ≤ 50 | FRS 102 Section 1A |
| Medium / large | Above small limits | Above small limits | Above small limits | Full FRS 102 (or IFRS / FRS 101) |
Some companies cannot use the micro or small regimes even if they meet the numbers, such as certain financial services firms and public companies. Check eligibility before choosing.
FRS 105 vs FRS 102 Section 1A: the key differences
| Area | FRS 105 (micro) | FRS 102 Section 1A (small) |
|---|---|---|
| Asset valuation | Historical cost only; no revaluations or fair value | Revaluation and fair value permitted |
| Deferred tax | Not recognised | Recognised |
| Development costs, borrowing costs | Expensed | Can be capitalised |
| Notes | Minimal: directors' advances and guarantees, commitments | Fuller set of required disclosures |
| True and fair view | Presumed by law | Must be achieved; extra disclosure may be needed |
Pro forma accounts: EY and BDO model layouts and the statutory formats
Rather than reproduce full layouts here, use the reference sets below. Each link opens the publisher's own page.
| Framework | Reference | Publisher | Access |
|---|---|---|---|
| Full FRS 102 (private group) | Good Practice Group Limited — FRS 102 illustrative financial statements | EY | Free PDF download |
| Full FRS 102 (large private company) | FRS 102 Layout Limited — illustrative financial statements 2025 | BDO | Free PDF download |
| FRS 102 Section 1A (small company) | Balance sheet and profit and loss formats — Schedule 1, Part 1, Section B | Small Companies Regulations 2008 | Free |
| FRS 105 (microentity) | Micro-entity formats — Schedule 1, Part 1, Section C | Small Companies Regulations 2008 | Free |
A small company's balance sheet and profit and loss account follow the same statutory formats as larger companies. Section 1A mainly cuts the notes, so the EY and BDO models show the layout and your notes are a reduced set. Micro-entities use the much shorter Section C formats.
Model accounts are illustrative. Your own accounts must follow the Companies Act formats and the disclosures your framework requires.
Filing changes coming in April 2028
Under the Economic Crime and Corporate Transparency Act, small companies and micro-entities will have to file a profit and loss account at Companies House, and abridged accounts will be abolished. All accounts will need to be filed through commercial software. The start date has moved from April 2027 to 1 April 2028, and companies will be able to opt out of having their P&L published on the public register.
Which framework should you choose?
- Choose FRS 105 if you qualify, have no need for revaluations or deferred tax, and want the simplest accounts.
- Choose FRS 102 Section 1A if lenders or investors want fuller information, you hold investment property or revalued assets, or you expect to grow out of micro-entity limits soon.
- Review the choice every year, especially after the April 2025 threshold increases, which moved many companies into a smaller category.
Need help choosing a framework or preparing FRS 102 transition adjustments? [Speak to Step 1 Advisors about year-end accounts.]→