UK GAAP frameworks: FRS 105, FRS 102 Section 1A and FRS 102
UK GAAP for most companies is set by the Financial Reporting Council. A micro-entity may use FRS 105, a small company usually uses FRS 102 Section 1A, and medium-sized and large companies use full FRS 102. Changes from the 2024 periodic review apply to periods beginning on or after 1 January 2026.
Key facts
| FRS 105 | Micro-entities using the micro-entity provisions: historical cost only, no deferred tax, notes at the foot of the balance sheet |
|---|---|
| FRS 102 Section 1A | Small companies: reduced presentation and disclosure, no statement of cash flows; full FRS 102 is allowed |
| Full FRS 102 | Medium-sized and large companies: complete set including the statement of changes in equity and statement of cash flows |
| Periodic Review 2024 | Periods beginning on or after 1 January 2026: new revenue model, leases on the lessee's balance sheet under FRS 102 |
| Size thresholds amendment | Financial years beginning on or after 6 April 2025, following the new company size thresholds |
As at 25 October 2026.
FRS 105 for micro-entities
Accounts that follow the micro-entity minimum are presumed to give a true and fair view (Companies Act 2006, s396). The trade-offs: no revaluations or fair values, no deferred tax, and only a balance sheet with notes at its foot plus a profit and loss account. A micro-entity may choose FRS 102 Section 1A instead, for example to revalue property.
FRS 102 Section 1A for small companies
Section 1A keeps the recognition and measurement of FRS 102 but reduces what a small company must present and disclose. For periods beginning on or after 1 January 2026 a small company must state that it complies with FRS 102 and applies Section 1A, explain its going concern assessment and disclose dividends; before 2026 these were only encouraged.
What changed from 1 January 2026
- Revenue: FRS 102 Section 23 follows a five-step model based on IFRS 15, with simplifications.
- Leases: under FRS 102 a lessee brings most leases onto the balance sheet as a right-of-use asset and a lease liability, with exemptions for short-term and low-value leases. FRS 105 keeps the old split between operating and finance leases.
- FRS 105: its revenue section was rewritten; it applies to contracts that begin after first application.
Frequently asked questions
Can a micro-entity use FRS 102 Section 1A instead of FRS 105?
Yes. FRS 105 is optional for a company that qualifies for the micro-entity provisions. A micro-entity that wants to revalue assets or give fuller notes can use FRS 102 Section 1A.
Does a small company need a statement of cash flows?
No. FRS 102 exempts small entities from the statement of cash flows. Medium-sized and large companies must present one unless another exemption applies.
What is the Periodic Review 2024?
The FRC's update of FRS 102 and the other UK standards, issued on 27 March 2024. It applies to periods beginning on or after 1 January 2026 and brings a new revenue model and on-balance-sheet lease accounting for lessees under FRS 102.
Sources
- FRC: FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland
- FRC: FRS 105 The Financial Reporting Standard applicable to the Micro-entities Regime (September 2024)
- FRC: amendments to FRS 102 and other FRSs, Periodic Review 2024
- FRC: amendments to FRS 102 and FRS 105 for the UK company size thresholds (March 2025)
- Companies Act 2006, section 396
- The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 (SI 2008/409), Schedule 1
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Join the waitlistGeneral information about UK company law and tax, not legal or tax advice. The directors remain responsible for the accounts and returns they approve and file.