Micro-Entity Accounts Explained for Property Companies & SPVs

To qualify for micro-entity, a company must meet at least two of three conditions: turnover of £1 million or less, a balance sheet total of £500,000 or less, and no more than 10 employees on average.  

This article covers micro-entites accounts thresholds in full, who's excluded, what must be filed with Companies House and HMRC, the FRS 105 quirk affecting property companies, and the filing deadlines directors need to know. 

Micro company accounts are not a separate legal structure and nothing gets registered. They are an accounts classification under the Companies Act 2006, available to any private company small enough to meet the size test in a given year. A company can move in and out of the classification purely based on how its turnover, assets and headcount move year to year. 

Two companies with identical trading activity can end up filing very different accounts, simply because one owns a property that has been revalued and the other hasn't. The precision required in that test, and what happens once a company sits either side of it, is where most of the practical confusion sits for property investors. 

Because micro company accounts are a classification rather than a registration, there is no application to make and no confirmation letter from Companies House. A company prepares its accounts on the basis it believes applies, and the qualifying figures are checked retrospectively if the classification is ever queried.  

For how company accounts work across all company sizes, see our Complete Guide to Company Accounts. 

The current figures increased under The Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 (SI 2024/1303), which took effect for financial years beginning on or after 6 April 2025. Here's the full comparison against the previous thresholds: 

Balance sheet total means gross assets. This is everything shown as an asset before liabilities are deducted. It's not the same as net assets or shareholders' funds. 

Where a financial period runs longer or shorter than 12 months, for instance a company's first period after incorporating partway through the year, turnover must be adjusted proportionately before testing it against the £1 million micro company accounts limit. Balance sheet and employee figures aren't adjusted this way, since both are measured at a point in time or as an average, not accumulated over the period. 

The same 2024 regulations also reduced directors' report disclosure requirements across all company sizes, including removing the disabled-employees disclosure and cutting other narrative content. This isn't micro-entity-specific, since micro-entities rarely file a director's report. 

Do I Need to Qualify for Two Years Running? 

After that first year, moving in or out of the thresholds only changes the company's status if it happens in two consecutive financial years. A company that has one unusually large year, for example from a one-off property disposal pushing turnover or the balance sheet above the limit, does not automatically lose micro-entity status. It has to breach the thresholds for a second year running before the classification actually changes, which gives most property companies useful room to absorb a one-off transaction without a knock-on change to how their accounts must be prepared the following year.

Meeting the size test is not enough on its own. Certain categories of company are excluded regardless of turnover, assets or headcount: 

• Public limited companies (PLCs) 
• Charitable companies 
• Insurance companies and insurance intermediaries 
• Banking companies and e-money issuers 
• MiFID investment firms 
• UCITS management companies 
• Overseas companies required to prepare accounts under UK company law 

Under sections 384A and 384B of the Companies Act 2006, a parent company can qualify as a micro-entity only if both the company and the group it heads meet the relevant conditions. A parent company that prepares consolidated group accounts under section 399(4) cannot use the micro-entity provisions for that year. 

A subsidiary also cannot use the micro-entity provisions if its accounts are included in consolidated group accounts for the year, even if it is very small on a standalone basis. However, group membership alone is not necessarily a bar: if the parent is entitled to claim an exemption from preparing group accounts and no consolidation takes place, the subsidiary may still qualify for micro company accounts independently, subject to the other statutory exclusions. This issue commonly arises in family investment companies and property groups using holding companies and SPVs. 

Can an LLP File Micro Company Accounts? 

A micro-entity accounts must file a balance sheet with any accompanying notes. The balance sheet must print the name of a director and carry a director's signature, and it must include a statement confirming the accounts have been prepared in accordance with the micro-entity provisions. 

Beyond that minimum, a micro-entity can choose whether to also include: 

• A profit and loss account 
• A director's report 

Both are optional for members' accounts under the exemption at section 415 of the Companies Act 2006. That's separate from what gets filed publicly at Companies House: a company can prepare a full profit and loss account for its own shareholders and still file only the abbreviated balance sheet with the registrar.

Do Micro-Entity Accounts Need to Be Audited? 

For most single-company property SPVs with no minority shareholders pushing for one, this simply means no statutory audit requirement.

The choice matters most where a company holds a revaluing asset. A company can elect into small company treatment specifically to retain fair value accounting, or simply to present a fuller set of accounts to a lender or prospective buyer. That trade-off is the deciding factor for a lot of property companies, which is where the next point becomes relevant. 

FRS 105, the financial reporting standard applicable to companies using the micro-entities regime, does not permit investment property to be measured at fair value. Investment property is generally carried at cost less accumulated depreciation and impairment. 

Accordingly, where a property SPV moves from FRS 102 accounts in which its investment properties were measured at fair value to micro company accounts under FRS 105, the properties will normally need to be brought onto the FRS 105 cost-based measurement model. This may materially reduce the carrying amount compared with the previous FRS 102 figures and will remove the accounting effect of unrealised fair-value gains. The transition may require analysis of original cost, land and building components, accumulated depreciation and impairment. 

The change can also affect deferred tax: FRS 102 may require deferred tax on relevant temporary differences, whereas FRS 105 does not recognise deferred tax in the financial statements. The company’s tax computation remains a separate matter. 

This is therefore not merely a change in presentation. Although the underlying property and its market value are unchanged, the statutory accounts may show a substantially lower asset carrying amount than a lender or valuer would expect. For a company undergoing refinancing or portfolio expansion, management should provide a current valuation and a reconciliation between the FRS 105 carrying amount and market value when discussing loan-to-value and asset-coverage metrics. 

Micro-Entity Accounts Worked Example: Is My Property SPV a Micro-Entity? 

Test:  Turnover (£48,000) is not more than £1 million. Balance sheet total (£420,000) is not more than £500,000. Average employees (0) is not more than 10. The company meets all three conditions, comfortably clearing the two-of-three threshold. The number of directors isn't relevant to this test. 

Result: the SPV passes the size test for micro-entity accounts. It must still be checked against the other exclusions, including the group-company rules covered above, before treating micro-entity status as settled. If the £420,000 balance sheet total is based on FRS 102 fair-value accounting, the FRS 105 point above should be weighed before deciding whether the election is commercially appropriate. 

HMRC is different. The Company Tax Return comprises the CT600, relevant supplementary pages, the company’s accounts, tax computations and any required supporting information. HMRC therefore receives information that is not necessarily visible on the Companies House register, including the figures used to reconcile accounting profit to taxable profit. 

A reduced public filing does not mean reduced tax-compliance obligations. A director who assumes that a lean Companies House filing means HMRC receives only the same limited information would be working from the wrong premise.

Deadlines depend on whether these are a company's first accounts or a subsequent set: 

• First accounts: 21 months from the date of incorporation 
• Subsequent accounts: 9 months from the company's accounting reference date 

Check our Company Accounts Filing Deadline page if you need to work out the exact date for your company's next filing. 

Filing runs through Companies House's WebFiling service or commercial software. The joint HMRC/Companies House online filing service, commonly known as CATO, previously let companies file accounts and their Company Tax Return together for free. It closed on 31 March 2026. Companies that were relying on it now need commercial software to file their Company Tax Return with HMRC, even where accounts continue to be filed with Companies House by other routes.

A dormant micro-entity can file simplified dormant company accounts with Companies House. It's also worth separately checking whether the company qualifies as dormant for Corporation Tax purposes with HMRC. That's a distinct test from the Companies House dormancy definition, based on whether the company has any significant accounting transactions in the period. Getting it right can mean the company doesn't need to file a CT600 at all for that period. 

This is particularly relevant for a newly incorporated property SPV that hasn't yet completed on a purchase, or a management company holding a freehold with no trading activity of its own. Both scenarios are common in property structures, and both can genuinely qualify as dormant for one or both purposes, even though the tests aren't identical.

Yes. The Companies House accounts-filing regime is due to change from April 2028. Small companies and micro-entities will generally have to file a profit and loss account with Companies House as part of their annual accounts, rather than being able to omit it under the current reduced filing rules. They will be able to opt out of having the profit and loss information published on the public register, although the detailed opt-out process has not yet been confirmed. 

The reforms were originally expected to take effect from April 2027 but have been deferred by one year to give companies more time to prepare. The government describes the preparation period as one full accounting year plus nine months. 

The reforms will also remove the option for small companies to file abridged accounts and will require all company accounts filings to be made through commercial software in iXBRL format. The existing web-based and paper routes for accounts filings are expected to close from 1 April 2028. 

The change means that the current minimal-public-disclosure advantage of micro-entity accounts is time-limited. However, the extent to which profit and loss information will ultimately be visible to the public will depend on the final opt-out regulations and filing mechanics. 

In practice, this is the reason many landlords choose the micro-entity route: it keeps profitability off the public register, which matters to a director who'd rather tenants, competitors or business contacts not see it on Companies House. It's a public-disclosure benefit of micro company accounts only. It doesn't change what HMRC sees, and it doesn't stop a lender asking directly for fuller figures. 

We'd treat that privacy as time-limited rather than permanent. It narrows from April 2028, and any incorporation or restructuring decision made now on the strength of today's rules should assume that change is coming, not that the current position will hold.