What are the micro-entity thresholds?
A micro-entity is the smallest size of UK company for accounts purposes. It can prepare very short accounts and file only a balance sheet with notes. To qualify, a company must meet at least two of these three conditions, per Companies House’s accounts guidance (updated 23 October 2026):
| Condition | Micro-entity | Small company |
|---|---|---|
| Turnover | £1 million or less | £15 million or less |
| Balance sheet total | £500,000 or less | £7.5 million or less |
| Average number of employees | 10 or fewer | 50 or fewer |
These limits apply to accounting periods starting on or after 6 April 2025.
What were the limits before April 2025?
For earlier periods the micro-entity limits were lower: £632,000 turnover and £316,000 balance sheet total, with the same 10 employees. The small company limits were £10.2 million and £5.1 million. A company whose current period started before 6 April 2025 still uses the old figures, so the rise helps from the next period onwards.
How does the two-of-three test work?
Each condition is checked separately, and two passes are enough. Three examples:
| Company | Turnover | Balance sheet | Staff | Micro? |
|---|---|---|---|---|
| A design consultancy | £180,000 | £60,000 | 2 | Yes, all three |
| A property company | £90,000 | £900,000 | 0 | Yes, turnover and staff |
| A growing retailer | £1.4m | £420,000 | 14 | No, only one |
The “balance sheet total” is the total of the assets before deducting liabilities, not the net assets figure. A company with a large property and a matching mortgage can fail the balance sheet test while showing small net assets.
What about a company’s first years?
In its first financial year, a company qualifies if it meets the conditions in that year. After that, it must meet them in the current year and the year before.
There is also a buffer. A company that drops out for a single year keeps the exemption for that year, and only loses micro-entity status after failing the test two years running. That stops one unusual year forcing a change of accounts format.
Which companies are excluded?
Size isn’t the only test. Some companies can’t use the micro-entity rules at any size, including:
- public limited companies (PLCs);
- charities;
- overseas companies and unregistered companies;
- parent companies of groups that aren’t small, and companies that prepare group accounts;
- subsidiaries included in consolidated group accounts.
What do micro-entity accounts contain?
The accounts prepared for shareholders include a balance sheet, a profit and loss account and notes, with a required statement on the balance sheet. The filed copy at Companies House can leave out the profit and loss account and directors’ report. A plan to make micro-entities file the profit and loss account from April 2028 was paused on 23 October 2026. The micro-entity accounts page covers the contents and statements in detail.
Why the April 2025 rise matters
The new turnover limit is 58% higher than the old one, and the balance sheet limit 58% higher too. Companies that had grown past £632,000 turnover but stayed under £316,000 in assets, with 10 or fewer staff, were already micro-entities on the two-of-three test; the change mainly brings in companies with more assets, such as small property companies and businesses that own equipment.
UK searches for “micro entity thresholds” run at about 320 a month (DataForSEO, November 2026), small next to the 1,000 for “micro entity accounts”. Most directors look up the format before checking whether they qualify for it, although the test is the step that decides the format.
Sources
- Preparing and filing Companies House accounts, sections 9 and 10 (Companies House), updated 23 October 2026. Checked 6 November 2026.
- Prepare annual accounts for a private limited company (GOV.UK), updated 14 October 2026. Checked 6 November 2026.
- Companies House update to accounts filing from April 2028 (GOV.UK), updated 23 October 2026. Checked 6 November 2026.
Search figures are 12-month UK averages from DataForSEO (Google Ads data), pulled 6 November 2026. Spotted something out of date? Tell us and it will be corrected.