Micro-entity and small company accounts – what directors need to know

Every year in the UK, registered companies must prepare annual accounts. These are filed with Companies House, and the accounts are also used in the company’s Corporation Tax Return to HMRC.

The accounts show how the business has performed during the year and provide the figures used to calculate the company’s Corporation Tax liability.

It is the legal responsibility of a company’s directors to make sure the accounts are completed accurately and filed on time – even if you use an accountant.

For most one-person companies, this will mean filing under the micro-entity regime, which allows simplified accounts.

In this guide, Christian Hickmott, MD of Integro Accounting, explains that changes to the filing regime are due to take effect from April 2028 (see below).

What is included in annual accounts?

For larger companies, statutory accounts typically include a balance sheet, a profit and loss statement, notes to the accounts, a directors’ report, an auditor’s report (if required), and the names and signatures of the directors.

See the official requirements guide for more details.

Balance sheet

A balance sheet provides a snapshot of your company’s financial position at a single point in time. It shows assets, liabilities and equity, so readers can understand how the business is funded and how resources are being used.

If total assets do not equal liabilities plus equity, something is wrong in the figures or in the underlying position.

Profit and loss statement

A profit and loss statement shows income and expenditure over a period.

Revenues are listed on one side, while costs, such as salaries, rent and taxes, are listed on the other.

The difference is profit or loss. Many owners produce monthly and annual profit and loss (P&L) statements to track margins and act early if performance dips.

Read our guide to the profit and loss account and balance sheet for more information.

Company size thresholds from April 2025

From 6 April 2025, the company size thresholds increased. Broadly, if a company meets at least two of the three criteria in a band, it falls into that size category:

• Micro: turnover £1,000,000 or less, balance sheet total £500,000 or less, 10 employees or fewer.
• Small: turnover £15,000,000 or less, balance sheet total £7,500,000 or less, 50 employees or fewer.
• Medium: turnover £54,000,000 or less, balance sheet total £27,000,000 or less, 250 employees or fewer.

These thresholds apply for financial years starting on or after 6 April 2025 and may alter your reporting and audit position. See the ICAEW update for background.

Filing requirements by company type (current rules)

Company type	Balance sheet	Profit & loss account	Notes
Micro-entity	✔️ (simplified)	❌ (may currently be omitted from public filing)	Minimal notes only
Small company	✔️	❌ (may currently be omitted from public filing)	Reduced disclosure
Dormant	✔️ (dormant accounts)	❌	Limited requirements
Medium / large	✔️	✔️	Fuller disclosure + audit where required

Micro-entities (for most of our readers)

Micro-entities can prepare simpler accounts that meet the minimum statutory requirements.

Under the current filing regime, this typically means a stripped-down balance sheet with minimal notes. A profit and loss account does not normally have to be placed on the public register.

This changes from April 2028. Micro-entities will have to file a profit and loss account with Companies House, although they will be able to opt out of displaying it publicly (see below).

Small companies

If your company qualifies as small under the thresholds above, you can typically prepare accounts under the Small Companies Regime.

Certain small companies may also be exempt from audit if the relevant conditions are met.

See GOV.UK guidance on micro and small companies.

Dormant companies

Even if your company has not traded during the year, directors must still deliver dormant accounts to Companies House. See our dormant company guide.

Why the statements matter internally

Statutory accounts satisfy legal duties, but they are also vital management tools.

A P&L shows whether the company is making money or losing it, while a balance sheet shows how it is funded.

Used together, they help you spot overspending, identify products or services that do not carry their weight, and adjust pricing.

Lenders and investors will expect reliable accounts before committing funds. Public sector tenders often require evidence of financial standing.

Accounting reference date and year-end

When you incorporate, your company is given an accounting reference date (ARD).

This is the end of your financial year and is usually the last day of the month of incorporation.

Your first set of accounts typically spans more than 12 months, from the date of incorporation to the first accounting reference date.

Example: If you register on August 1, your first accounting reference date will normally be August 31.

Your first accounts will run from August 1 to August 31 of the following year.

After that, each set typically covers 12 months to the same date.

You can change your year-end by shortening or extending it, subject to limits.

Extensions are generally limited to once every five years, and you cannot change the date if your accounts are already overdue.

You can change the date online or by filing form AA01. See the GOV.UK page on changing your year end.

Deadlines and penalties

• File first accounts with Companies House within 21 months of incorporation.
• File subsequent annual accounts with Companies House within 9 months of the financial year end.
• Pay Corporation Tax 9 months and 1 day after the end of the Corporation Tax accounting period.
• File your Company Tax Return within 12 months of the end of the Corporation Tax accounting period.

If your accounts are late at Companies House, a civil penalty applies. The penalty rises with the length of the delay and is doubled if you file late two years in a row. Current penalty bands are listed on GOV.UK.

Upcoming changes from April 2028

Companies House confirmed in June 2026 that major changes to company accounts filing will take effect from 1 April 2028.

Software-only accounts filing

From 1 April 2028, companies will have to file their annual accounts with Companies House using commercial software in iXBRL format.

The existing web and paper routes for filing accounts will close. Companies House web services will still be available for other filings, such as confirmation statements and changes to company information.

Profit and loss accounts for small companies and micro-entities

From April 2028, small companies and micro-entities will be required to file a profit and loss account with Companies House.

However, eligible small companies and micro-entities will be able to opt out of having their profit and loss account displayed on the public register. Companies House will still receive the information even where it is not made public.

This is an important distinction from the current regime, under which qualifying small companies and micro-entities can generally omit their profit and loss account from the accounts they deliver to Companies House.

Abridged accounts will end

The April 2028 reforms will also remove the option for small companies to prepare and file abridged accounts. Companies will instead have to meet the filing requirements applicable to their size and circumstances.

See the government’s Changes to accounts hub for the latest information on the new filing regime.

Hire an accountant (recommended!)

Directors remain legally responsible for the accuracy of the accounts.

While you can prepare them yourself, many owners hire a qualified accountant to prepare compliant accounts, handle submissions to Companies House and HMRC, and reduce the risk of errors or late filing penalties.

At LCH, we always recommend that, unless you have accounting experience, you should hire an accountant to manage your accounts.