Every limited company must file accounts with Companies House each year. Size, profit, loss and dormancy make no difference to the obligation itself. A company that is very small may qualify as a micro-entity, which lets it prepare and file a much simpler set of accounts: a simplified balance sheet with notes, carrying the same audit and directors’ report exemptions that small companies receive.
A company qualifies as a micro-entity if it meets any 2 of 3 tests: turnover of £1 million or less, balance sheet total of £500,000 or less, or 10 employees or less, for accounting periods beginning on or after 6 April 2025. A company that qualifies can still choose to file full accounts. This guide sets out micro-entity accounts vs full accounts in full: the thresholds, the contents of each set, and how to choose between them.
Do I Need Micro-Entity Accounts or Full Accounts?
You must file a set of annual accounts whatever your size. The size tests decide only which format those accounts take: micro-entity, abridged (small company) or full. Dormant companies file dormant accounts, a separate and simpler regime again.
The format choice affects one thing: what appears on the public register at Companies House. HMRC always receives the full statutory accounts alongside the Company Tax Return (CT600), whatever you file publicly. Late filing costs the same regardless of format: penalties for a private company start at £150 for accounts up to one month late and rise to £1,500 beyond six months.
Not every company may use the micro-entity regime. Public limited companies, LLPs, investment undertakings, financial institutions, not-for-profit bodies and most group subsidiaries are excluded. These companies file small company or full accounts at any size.
What Are the Micro-Entity and Small Company Thresholds?
The size tests changed for accounting periods beginning on or after 6 April 2025. Many Newcastle companies are filing under the new micro company thresholds for the first time, and plenty of guides still quote only the old figures. Both regimes matter: the old tests govern earlier filings, the new tests govern current ones.
A company meets a size category if it satisfies any 2 of the 3 tests for that category. The table below sets out the four test sets side by side.
| Size test | Micro-entity (from 6 Apr 2025) | Small company (from 6 Apr 2025) | Micro-entity (before 6 Apr 2025) | Small company (before 6 Apr 2025) |
|---|---|---|---|---|
| Turnover | £1m or less | £15m or less | £632,000 or less | £10.2m or less |
| Balance sheet total | £500,000 or less | £7.5m or less | £316,000 or less | £5.1m or less |
| Employees | 10 or less | 50 or less | 10 or less | 50 or less |
The table shows how far the limits moved. The micro-entity turnover ceiling rose from £632,000 to £1 million and the small company ceiling from £10.2 million to £15 million. The employee tests did not change.
Size is tested accounting period by accounting period. Breaking a threshold in one year moves the company into the larger category for that year; it does not lock the company out of micro-entity status permanently. The trigger date is the start of the accounting period, so a period beginning 5 April 2025 still uses the old tests while one beginning 7 April 2025 uses the new.
What Do Micro-Entity Accounts Actually Include?
Micro-entity accounts are accounts prepared to the statutory minimum. A set contains three things:
- A simplified balance sheet with footnotes
- A director’s printed name and signature on that balance sheet
- A statement that the accounts are prepared under the micro-entity provisions
What you send where differs. To Companies House goes only the simplified balance sheet with its notes. To HMRC goes the full statutory accounts with the Company Tax Return, as for any other company. Micro-entity accounts need no directors’ report and no audit, the same exemptions small companies receive.
Full accounts for a limited company contain more: balance sheet, full profit and loss account, notes, plus a directors’ report and, where required, an auditor’s report. Small companies hold a middle option in abridged accounts. Abridgement requires the agreement of all members. An abridged set is a simpler balance sheet with notes, with the option of a simpler profit and loss account, which may start from gross profit and omit turnover and cost of sales, plus a simpler directors’ report.
One exclusion repeats at this level: a company included in group accounts cannot use the micro-entity regime whatever its individual size. It may still qualify for small company treatment.
The choice among micro-entity, abridged and full is a choice about the public register, not about tax. HMRC’s copy never simplifies.
Should You Choose Micro-Entity, Abridged or Full Accounts?
Choose based on what the company needs from its public record. Micro-entity accounts disclose the least: suppliers, customers and competitors browsing the register see only a stripped-back balance sheet. Full accounts disclose the most. Companies seeking finance, preparing to grow or building a public track record often file fuller accounts than the minimum, because lenders and investors read the register. For companies happy to stay private and small, the minimum is rational. Abridged accounts vs micro-entity accounts is a genuine choice for small companies: both reduce the public file, and micro-entity reduces it furthest.
One reform changes the trade-off. From 1 April 2028, small companies and micro-entities must file a profit and loss account with Companies House, as larger companies do now. An option to opt out of publishing the P&L on the public register is planned; the detail of the opt-out is still to be confirmed. From the same date, every company must file its accounts through commercial accounting software, as Companies House retires WebFiling. The change is several filing years away, but it is worth weighing now when deciding how minimal to keep the public file.
Common Questions Answered
Is a micro-entity the same as a dormant company?
No. Dormancy is about activity; micro-entity status is about size. A dormant company has no significant accounting transactions at all and files dormant accounts: a balance sheet with notes, simpler still than micro-entity accounts. A dormant company that also qualifies as small needs no audit. A separate dormant company guide covers that regime.
What happens if my company grows beyond the thresholds mid-year?
Size is tested per accounting period, so a company that breaks a threshold files as a larger company for that year. The position is not permanent: under the 2-year rule, a company stays in its category until it breaches the tests in 2 consecutive years. Check the figures with your accountant as turnover approaches the limits.
Can I file full accounts even if I qualify as a micro-entity?
Yes. Filing fuller accounts is always allowed, and it makes sense where the company expects to grow, seeks finance or wants a fuller public record. The choice affects the Companies House register only. HMRC receives the full statutory accounts with the CT600 either way.
Do micro-entity accounts still need a balance sheet signed by a director?
Yes. The simplified balance sheet carries a director’s printed name and signature, plus the statement that the accounts are prepared under the micro-entity provisions. The simplification is in content, not formality.
How Aqua Accounting Can Help
The Aqua Accounting team prepares Newcastle companies’ accounts at the right level, micro-entity, abridged or full, and files them properly with Companies House and HMRC. Through its dedicated company accounts service, Aqua checks your size tests each year, applies the correct regime and keeps the public file at the level you want.
Aqua also prepares companies for the 2028 changes. Accounts already file through compatible software, so the retirement of WebFiling changes nothing day to day, and the new P&L requirement can be planned for rather than reacted to. The wider annual filings, including the confirmation statement, registered office details and director changes, run through its company secretarial service. Book a review of your filing position and take the guesswork out of the register.
Disclaimer:
The information provided in this blog is for general informational purposes only and does not constitute professional advice. While every effort is made to ensure accuracy, Aqua Accounting accepts no responsibility for any actions taken based on this content. You should seek professional advice tailored to your individual circumstances.
Omar Ahmed is an ICAEW Chartered Accountant and the Director of Aqua Accounting, a UK-based accountancy practice providing expert accounting and tax services to individuals, sole traders, and small to medium-sized businesses. As a trusted accountant in Newcastle, he offers expertise in annual accounts, self-assessment tax returns, company accounts, VAT, payroll, bookkeeping, and company formation.
With a strong focus on delivering clear and practical financial advice, Omar helps clients stay compliant while improving their understanding of their finances. Through Aqua Accounting, he works closely with business owners to simplify accounting processes, meet tax obligations, and support informed financial decision-making.