What is a micro-entity?
A micro-entity is the smallest size of UK company for accounts purposes. It can use the lightest set of accounting rules and publishes the least information. To qualify, a company must meet two or more of these conditions under section 384A of the Companies Act 2006:
| Condition | Financial years starting on or after 6 April 2025 | Earlier financial years |
|---|---|---|
| Turnover | £1 million or less | £632,000 or less |
| Balance sheet total | £500,000 or less | £316,000 or less |
| Average number of employees | 10 or fewer | 10 or fewer |
The higher limits came from SI 2024/1303. A few definitions matter:
- Balance sheet total means the total of the amounts shown as assets on the balance sheet (gross assets, not net assets).
- Employees are averaged: count the people employed under contracts of service in each month, add the monthly figures, and divide by the number of months.
- Turnover limits are adjusted proportionately if the financial year is not 12 months long, for example a 9-month first period.
How the thresholds apply from year to year
In its first financial year a company is a micro-entity if it meets the conditions in that year. After that, section 384A(3) says a change only counts if it happens in two consecutive financial years. So one unusually big year does not knock a company out of the micro-entity regime, and one quiet year does not bring a larger company into it.
Example: a company has turnover of £800,000 and assets of £300,000 in year 1, then £1.2m turnover and £550,000 of assets in year 2. It fails two conditions in year 2, but it is still a micro-entity for year 2 because it met the conditions in year 1. If it fails again in year 3, it loses micro-entity status for year 3.
Micro-entity and small company thresholds compared
Companies that are too big to be micro-entities are often still small companies. The small company thresholds for financial years starting on or after 6 April 2025 are also 2 of 3:
| Condition | Micro-entity | Small company |
|---|---|---|
| Turnover | £1 million or less | £15 million or less |
| Balance sheet total | £500,000 or less | £7.5 million or less |
| Employees (average) | 10 or fewer | 50 or fewer |
Before 6 April 2025 the small company limits were £10.2m turnover and £5.1m balance sheet total. Small companies can claim audit exemption and choose not to file their directors' report and profit and loss account at Companies House, but their accounts contain more detail than micro-entity accounts.
Which companies cannot use micro-entity accounts
Size is not the only test. Section 384B and section 384 exclude some companies whatever their size, including:
- public companies (plcs)
- charitable companies
- authorised insurance companies, banking companies, e-money issuers, MiFID investment firms and UCITS management companies
- investment undertakings and financial holding undertakings, as defined in the relevant EU directive
- members of an ineligible group, for example a group containing a traded company or a firm authorised under FSMA 2000
- a subsidiary whose accounts are included in consolidated group accounts
- a parent company that prepares group accounts
A parent company can only be a micro-entity if it meets the conditions itself and the group it heads qualifies as a small group.
What micro-entity accounts contain
Micro-entity accounts are short. According to Companies House guidance, a micro-entity prepares:
- a balance sheet in one of the specified formats, with a statement that the accounts were prepared under the micro-entity provisions
- a profit and loss account in the specified format
- an auditor's report, unless the company claims audit exemption (most micro-entities do)
- any notes to the accounts
The notes are minimal. Regulation 5A of SI 2008/409 removes almost every note, except the one in paragraph 57 of Schedule 1: the total of any financial commitments, guarantees and contingencies not included in the balance sheet. Companies that do not prepare group accounts must also disclose advances and credits to directors and guarantees given for them under section 413. An overdrawn director's loan account is the common example.
If the company claims audit exemption, the balance sheet also carries the audit exemption statement under section 477 of the Companies Act 2006.
What is published at Companies House
Today a micro-entity can send only its balance sheet, with less information, to Companies House. The profit and loss account is prepared for shareholders but not filed, so the public register does not show turnover or profit.
HMRC is different. The Company Tax Return must include the company's full statutory accounts, profit and loss account included, in iXBRL. Our CT600 guide explains that side. In practice a micro-entity produces one set of accounts and files two versions: the full set with HMRC and the shorter balance sheet version at Companies House.
A company with no significant transactions in the year may be able to file dormant accounts instead; see our dormant company accounts service.
Deadlines and late filing penalties
Private company accounts are due at Companies House 9 months after the accounting reference date. First accounts are due 21 months after incorporation, or 3 months from the accounting reference date if that is later. Micro-entity status does not change these dates.
Companies House charges automatic late filing penalties:
| Time after the deadline | Private company penalty |
|---|---|
| Up to 1 month | £150 |
| 1 to 3 months | £375 |
| 3 to 6 months | £750 |
| More than 6 months | £1,500 |
The penalty is doubled if accounts are filed late in 2 successive years. Filing accounts at Companies House has no fee (see our Companies House fees guide).
Abridged accounts end and software-only filing from 1 April 2028
Companies House has announced a package of accounts filing changes from April 2028, moved back from April 2027. From 1 April 2028:
- all companies must file accounts in iXBRL using commercial software; the Companies House web and paper filing routes close for accounts
- small companies and micro-entities must file a profit and loss account, with the option to opt out of it being published (HMRC and law enforcement can still see it)
- abridged accounts are removed
- companies claiming audit exemption must give a strengthened eligibility statement
- all component parts of the accounts and reports must be filed together
- a company needs a business reason to shorten its accounting reference period more than once in 5 years
Confirmation statements and director updates can still be filed online. Companies House said the date gives companies 21 months to prepare.
Some providers already say dormant or micro accounts are "software-only from 2026". That is ahead of the official timeline. Until 1 April 2028 the Companies House online service for micro-entity accounts remains available.
What to do now
Most micro-entities should plan for 2028 now rather than wait:
- check which size band your company falls into under the April 2025 thresholds, using the two-year rule
- move bookkeeping to software that can produce iXBRL accounts, since HMRC already requires iXBRL for the CT600
- expect your profit and loss account to go to Companies House from 2028, and decide whether you want to opt out of publication
- if you file abridged accounts today, plan to file fuller accounts, including the profit and loss account
Preparing them yourself or using Borderless Filings
Many directors of simple micro-entities prepare and file their own accounts, and Companies House charges nothing to file. What catches people out is the combination: the micro-entity balance sheet at Companies House, the full iXBRL accounts and CT600 at HMRC, and two different deadlines.
Our filing partner prepares the micro-entity accounts from your records, checks the size tests and exclusions, files the balance sheet at Companies House and the full accounts with the CT600 at HMRC, and sends reminders before each deadline. Documents are handled through our secure portal (security). We are not a firm of chartered accountants and do not give accounting or tax advice; for questions about accounting standards or tax planning, speak to a qualified accountant. See company accounts and CT600 and pricing.
Sources
- Companies House: Life of a company, part 1 accounts
- GOV.UK: Micro-entities, small and dormant companies
- legislation.gov.uk: Companies Act 2006, section 384A
- legislation.gov.uk: Companies Act 2006, section 384B
- legislation.gov.uk: Companies Act 2006, section 384
- legislation.gov.uk: Companies Act 2006, section 413
- legislation.gov.uk: SI 2024/1303, regulation 3
- legislation.gov.uk: SI 2008/409, regulation 5A
- legislation.gov.uk: SI 2008/409, Schedule 1 paragraph 57
- Companies House: Changes to accounts filing from April 2028
- Companies House: Late filing penalties
- HMRC: Businesses XBRL guide
Fees, deadlines and rules on this page were last checked on 27 September 2026.