Filing Micro-Entity Accounts: A Practical Guide for UK Companies

For many small UK companies, filing annual accounts with Companies House is one of the most important recurring compliance tasks. If your company is genuinely small, micro-entity accounts can significantly reduce the amount of financial information you need to prepare and publicly file.

But “micro-entity” does not mean “no accounts”. A micro-entity still has to keep proper accounting records, prepare annual accounts, send accounts to its members and file the required information with Companies House. It may also be able to claim an audit exemption and use simplified reporting requirements.

This guide explains who qualifies as a micro-entity, what the accounts contain, when they must be filed, how the filing process works and what is changing from 2028.

What Are Micro-Entity Accounts?

Micro-entity accounts are a simplified form of statutory accounts available to qualifying very small companies under the UK company accounts framework. The main attraction is reduced reporting. Compared with larger companies, an eligible micro-entity can generally prepare accounts using simpler requirements and, under the current rules, file less financial information publicly at Companies House. It can also benefit from exemptions available to small companies, including potential audit exemption. That makes the regime particularly relevant to:

• Owner-managed companies
• Freelancers operating through limited companies
• Small consultancies
• Online businesses
• Small agencies
• Contractors
• Early-stage startups
• Family-owned companies
• UK companies owned by overseas founders

However, eligibility must be checked against the company's circumstances rather than assumed from its turnover alone.

Who Qualifies as a Micro-Entity?

For accounting periods beginning on or after 6 April 2025, a company generally qualifies as a micro-entity if it meets at least two of these three conditions:

These thresholds apply to the relevant accounting period.

The Two-Out-of-Three Rule

You do not have to meet all three conditions. For example, imagine a UK software consultancy with:

• £750,000 turnover
• £650,000 balance sheet total
• 7 employees

It meets the turnover and employee tests, so it satisfies two of the three criteria and may qualify as a micro-entity, assuming no other exclusion applies. Now consider a company with:

• £1.2 million turnover
• £300,000 balance sheet total
• 8 employees

It fails the turnover test but meets the other two, so it may still qualify. This is why checking only turnover can give the wrong answer.

Micro-Entity Rules for Previous Accounting Periods

The thresholds have changed. For accounting periods beginning between 30 September 2013 and 5 April 2025, the relevant thresholds were:

• Turnover: £632,000 or less
• Balance sheet total: £316,000 or less
• Average employees: 10 or fewer

A company generally needed to satisfy at least two of the three conditions. This distinction matters when preparing accounts for an earlier accounting period. Founders should avoid copying today's thresholds into historical accounts without checking which rules apply to that period.

Who Cannot File Micro-Entity Accounts?

Not every small company can use the micro-entity regime. Companies that cannot prepare and submit micro-entity accounts include certain:

• Public limited companies
• Overseas companies
• Unregistered companies
• Charitable companies
• Companies excluded under specific Companies Act provisions
• Parent companies of groups that are not small
• Parent companies preparing consolidated accounts
• Subsidiaries included in consolidated group accounts

There are other statutory exclusions, so simply meeting the financial thresholds does not guarantee eligibility. This is particularly important for businesses that are part of a wider corporate structure. A UK subsidiary owned by an international group, for example, should not assume that its own small turnover automatically allows it to file micro-entity accounts.

How Do You Qualify as a Micro-Entity Over Multiple Years?

For an established company, the rules generally look at the current year and the previous year when determining whether the company continues to qualify. A company that qualifies in one year but temporarily stops meeting the criteria does not necessarily lose the available exemptions immediately. Conversely, returning below the thresholds can have specific consequences under the continuity rules. This is one reason company size should be reviewed each year rather than treated as a permanent status. A business can move from:

Micro → Small → Medium

as it grows, and its accounts requirements can become progressively more demanding.

What Do Micro-Entity Accounts Contain?

Under the current rules, micro-entity accounts must contain the required statutory financial information, including a balance sheet prepared in one of the permitted formats and the relevant notes. The accounts may also contain:

• A profit and loss account
• Notes to the accounts
• An auditor's report, where applicable

A company claiming audit exemption can submit unaudited accounts if it qualifies for that exemption. One particularly important requirement is the statement on the balance sheet confirming that the accounts have been prepared under the micro-entity provisions and delivered under the provisions applicable to companies subject to the small companies regime. The statement must appear prominently above the director's signature and printed name. That small detail illustrates an important point: simplified accounts are still statutory accounts.

Do Micro-Entities Need an Audit?

Not necessarily. A micro-entity qualifies as a small company and may therefore be eligible for the small-company audit exemption, provided it satisfies the relevant conditions and no other rule requires an audit. For accounting periods beginning on or after 6 April 2025, the small-company size thresholds are:

• Turnover: £15 million or less
• Balance sheet total: £7.5 million or less
• Average employees: 50 or fewer

A company generally needs to meet at least two of those conditions to qualify as small. There are circumstances in which a company that otherwise qualifies for an exemption may still require an audit. So “micro-entity” and “automatically unaudited” should not be treated as identical concepts.

When Are Micro-Entity Accounts Due?

Micro-entity accounts follow the company's normal Companies House accounts filing deadline. For most private limited companies, annual accounts must be filed within 9 months of the end of the company's financial year. The first accounts have a different deadline: they are generally due 21 months after the date the company was registered.

Example

Suppose a company has a financial year ending on 31 December 2026. Its annual accounts would normally need to reach Companies House by 30 September 2027. That deadline applies whether the company files micro-entity accounts or another permitted form of accounts.

Don't Confuse Accounts and Corporation Tax Deadlines

A common mistake is to assume that filing accounts with Companies House also satisfies the company's tax obligations. It does not. For most companies:

• Companies House accounts are generally due 9 months after the financial year-end.
• Corporation Tax is generally payable 9 months and 1 day after the end of the relevant Corporation Tax accounting period.
• The Company Tax Return is normally due 12 months after the end of that Corporation Tax accounting period.

These are separate obligations to different authorities.

How to Prepare Micro-Entity Accounts

The process is easier when bookkeeping has been maintained throughout the year.

Step 1: Reconcile the company's records

Before preparing accounts, check that:

• Bank accounts are reconciled
• Business income is recorded
• Expenses are supported by records
• Director transactions are accounted for
• Loans are correctly recorded
• Asset purchases are included
• Payroll information is complete
• Dividends and distributions are properly documented

Step 2: Establish whether the company qualifies

Check the two-out-of-three size test and review whether any exclusion applies. Don't simply choose micro-entity accounts because the company “looks small”.

Step 3: Prepare the statutory accounts

Prepare the accounts according to the applicable accounting framework and micro-entity requirements. This is where professional accounting support can be valuable, particularly where the company has:

• Stock
• Foreign currency transactions
• Loans
• Investments
• Fixed assets
• Related-party transactions
• Complex director balances
• Group-company relationships

Step 4: Check the accounts carefully

Before filing, verify:

• Company name
• Company number
• Accounting period
• Balance sheet figures
• Notes
• Required statements
• Director signature requirements
• Filing format

A filing being rejected close to the deadline can create unnecessary risk.

Step 5: File with Companies House

Companies House currently permits micro-entity accounts to be filed using compatible software or WebFiling. The online service that previously allowed companies to file accounts and Company Tax Returns together closed on 31 March 2026. From 1 April 2026, Company Tax Returns must generally be filed with HMRC using commercial software, while Companies House accounts can still be filed through its available routes. That separation is worth noting for directors who previously used the old joint filing service.

What Happens If You File Late?

Late filing of company accounts can result in a Companies House penalty. The important practical point is that being a micro-entity does not create an exemption from the filing deadline. A small turnover, dormant period or lack of Corporation Tax liability does not mean the company can simply skip its annual accounts.

Directors should therefore treat the accounts deadline as a fixed compliance date. If an unexpected issue arises, such as accounting records being incomplete, software problems or an accountant becoming unavailable, the sensible response is to deal with it immediately rather than allowing the deadline to pass.

Micro-Entity Accounts and Overseas Founders

Micro-entity accounts can be particularly relevant to international entrepreneurs who establish a UK limited company but manage operations from another country. For example, a non-UK resident might own a UK consultancy with:

• One director
• No UK employees
• £200,000 annual turnover
• A UK registered office
• Customers in several countries

If the company satisfies the statutory conditions and no exclusion applies, it may be eligible for the micro-entity regime. But the reduced accounts requirements do not eliminate the company's other responsibilities. An overseas-owned UK company may still need to consider:

• Corporation Tax
• Company Tax Returns
• VAT
• PAYE
• Confirmation statements
• Beneficial ownership information
• Accounting records
• Cross-border transactions
• Transfer pricing or other international tax considerations, where applicable

For global founders, this distinction is important: simplified accounts are not the same thing as simplified compliance overall.

Important Changes Coming in 2028

The micro-entity filing regime is changing. From 1 April 2028, micro-entities will be required to deliver a copy of their profit and loss account to Companies House, although they will have an option to opt out of having that information published on the public register. Details of how that opt-out will work are still to be confirmed.

The reforms also introduce a move towards software-based accounts filing. From April 2028, companies will be required to file annual accounts using commercial software in iXBRL format. The government has moved the implementation date from April 2027 to April 2028 to give companies more time to prepare.

This means a business that currently handles its accounts manually should not assume today's filing process will remain unchanged. For founders and directors, the practical response is simple: keep good digital accounting records and choose systems that can adapt to the new filing environment.

Micro-Entity Accounts Checklist

Before submitting your accounts, work through this checklist:

Eligibility

• [ ] Does the company meet at least two of the three micro-entity thresholds?
• [ ] Does any statutory exclusion apply?
• [ ] Have the rules for the relevant accounting period been checked?

Accounting records

• [ ] Bank accounts reconciled
• [ ] Income recorded
• [ ] Expenses supported
• [ ] Assets and liabilities checked
• [ ] Director balances reviewed
• [ ] Loans and dividends accounted for

Accounts

• [ ] Correct accounting period
• [ ] Correct company details
• [ ] Required balance sheet format
• [ ] Required notes included
• [ ] Micro-entity statement included
• [ ] Director signature requirements satisfied

Filing

• [ ] Companies House deadline confirmed
• [ ] Filing method selected
• [ ] Accounts checked before submission
• [ ] Filing confirmation retained

Tax

• [ ] Corporation Tax position reviewed separately
• [ ] Company Tax Return deadline recorded
• [ ] Corporation Tax payment deadline recorded

Frequently Asked Questions

Can a one-person limited company file micro-entity accounts?

Yes, potentially. The number of directors or shareholders does not by itself determine whether a company qualifies. The company must satisfy the relevant size criteria and not fall within an excluded category.

Are micro-entity accounts the same as dormant accounts?

No. A dormant company has different accounting considerations. A trading company can be a micro-entity, while a dormant company can have its own filing requirements.

Do micro-entities have to file accounts with Companies House?

Yes. Being a micro-entity does not remove the obligation to prepare and file annual accounts.

Can a micro-entity avoid an audit?

A qualifying micro-entity may be eligible for audit exemption because it also qualifies as a small company, but exemptions are subject to conditions and exceptions.

Do micro-entity accounts include a profit and loss account?

Under the current filing regime, micro-entities can benefit from an exemption from filing their profit and loss account at Companies House. From 1 April 2028, they will be required to deliver a profit and loss account but will have an option to opt out of its publication on the public register.

Can I file micro-entity accounts myself?

Yes, if you understand the applicable requirements and have accurate accounting records. However, professional advice can be worthwhile where the company has unusual transactions, international activity, group structures or other complexities.

Does filing micro-entity accounts also file my Corporation Tax Return?

No. Companies House accounts and the Company Tax Return are separate filings. Since the joint filing service closed on 31 March 2026, companies must use the appropriate filing routes for each obligation.

What happens if my company grows beyond the micro-entity limits?

You may no longer qualify for micro-entity reporting and could need to prepare accounts under the rules applicable to a small or larger company. The company's status should therefore be reassessed each year.

Conclusion

Filing micro-entity accounts can make annual reporting considerably more manageable for eligible UK companies, but the regime should not be mistaken for a way around statutory compliance. The starting point is eligibility: for accounting periods beginning on or after 6 April 2025, a company generally needs to satisfy at least two of the three tests covering £1 million turnover, £500,000 balance sheet total and 10 average employees.

Once eligibility is established, the company still needs accurate accounting records, properly prepared statutory accounts and timely filing with Companies House. The rules are also moving. From April 2028, micro-entities will have to deliver profit and loss accounts to Companies House, with an option to prevent publication on the public register, and all companies will move to commercial software for accounts filing.

For founders, including international entrepreneurs using a UK company, the best approach is to treat micro-entity status as a reporting simplification, not a compliance shortcut. Keep the books current, understand the filing calendar, separate Companies House obligations from HMRC tax requirements and review the company's size classification every year.

IncorpUK, as a UK company formation and management platform for global founders, operates in a landscape where formation is only the first step. Maintaining accurate records and meeting ongoing filing obligations is what keeps a small UK company in good standing.