Do I Qualify as a Micro-Entity? A Simple Checklist
If you run a small limited company, there is a good chance you qualify as a micro-entity. Many directors are unsure whether they meet the criteria. This guide explains the rules in plain English.
What is a micro-entity?
A micro-entity is the smallest category of limited company recognised under UK accounting rules. The regime was introduced to reduce administrative burdens on very small businesses. If you qualify, you can prepare simpler statutory accounts than larger companies, which means less information to compile and a faster preparation process.
The qualifying criteria
You normally qualify if you meet at least two of the following three conditions:
Turnover
£1 million or less
Your annual turnover for the accounting period
Balance sheet total
£500,000 or less
The total value of assets shown on your balance sheet
Employees
10 or fewer
The average number of employees during the year
If you meet at least two of these three conditions, you will generally qualify as a micro-entity.
Quick self-assessment
| Question | Your answer |
|---|---|
| Turnover below £1 million? | Yes / No |
| Assets below £500,000? | Yes / No |
| 10 employees or fewer? | Yes / No |
| Not an excluded company type? | Yes / No |
If you answer yes to at least two of the first three questions and are not an excluded company type, you are likely to qualify.
Examples
Example 1: Freelance consultant
- Turnover: £85,000
- Balance sheet assets: £15,000
- Employees: 1
Meets all three criteria. Qualifies as a micro-entity.
Example 2: Property investment company
- Turnover: £45,000
- Balance sheet assets: £900,000
- Employees: 0
Meets two of the three criteria. Likely qualifies.
Example 3: Growing software business
- Turnover: £2.3 million
- Balance sheet assets: £800,000
- Employees: 18
Meets none of the criteria. Does not qualify.
Who cannot use micro-entity accounts?
Certain companies are excluded regardless of size. These include public companies, some financial institutions, insurance businesses, and certain investment undertakings. If you operate in any of these sectors, specialist advice may be required.
What are the benefits?
Simpler accounts
Fewer disclosures required compared to larger company accounts.
Lower compliance costs
Preparation is usually faster and less involved.
Easier self-filing
Many directors find micro-entity accounts straightforward to prepare themselves.
Less to compile
Less information to gather and review at year end.
What you still need to do
Micro-entity status simplifies your accounts but does not remove your filing obligations. You must still:
- Keep accounting records throughout the year
- Prepare annual accounts
- File accounts with Companies House
- Submit a Corporation Tax return to HMRC where required
Changes coming in 2028
Many directors are surprised to learn that micro-entities will also be affected by upcoming Companies House reforms. From April 2028:
- Accounts must be filed through commercial software
- Profit and loss accounts will need to be filed with Companies House
- Smaller companies will be able to opt out of public publication of profit and loss information
- Paper and web filing routes for accounts will close
These changes apply even if your company remains a micro-entity. Understanding this now gives you time to choose the right software before the deadline arrives.
Common misconceptions
Myth: “I am a micro-entity so I do not need to file accounts.”
False. You still need to prepare and file annual accounts with Companies House.
Myth: “I am a micro-entity so I do not need to file Corporation Tax returns.”
False. Corporation Tax obligations still apply regardless of company size.
Myth: “I need an accountant because I am a limited company.”
False. Many micro-entities successfully prepare and file their own accounts using software.
Myth: “Micro-entity means dormant.”
False. Many active, trading businesses qualify as micro-entities.
Qualify as a micro-entity? Filing is simpler than you think.
The closure of HMRC's free filing service and the upcoming Companies House changes in 2028 mean that choosing the right software now matters. For most micro-entities, that does not mean paying for a full accounting platform or hiring an accountant.
Accountable Filing is built for exactly this situation. If your company has straightforward accounts and you want to stay in control of your own filings, it gives you everything you need in one place: accounts preparation, CT600, iXBRL generation, and submission to both HMRC and Companies House.
See how Accountable Filing works