FRS 101 and FRS 102 answer different questions. FRS 102 is the UK's main accounting standard — the default GAAP for companies that do not report under full IFRS. FRS 101 is a disclosure shortcut for group companies: IFRS numbers with most of the IFRS notes stripped out. Choosing between them (and their small sibling FRS 105) shapes the length of your accounts, what competitors can read at Companies House, how much year-end work the numbers take — and, right now, how you experience the biggest UK GAAP rewrite in a decade, which took effect for periods beginning 1 January 2026.
The frameworks in one tour
FRS 101 is for "qualifying entities" — members of a group whose parent publishes consolidated accounts that include them. They apply full IFRS recognition and measurement but skip swathes of disclosure: no cash flow statement, no financial-instrument note marathons, reduced share-based payment and intra-group related-party disclosures. The logic: the market gets its detail from the group accounts, so the subsidiary's statutory accounts can be lean. The natural users are UK subsidiaries of IFRS-reporting groups, whose finance teams keep one set of accounting policies group-wide and simply publish less locally.
FRS 102 is the standard for everyone else — from £2 million owner-managed companies (using its Section 1A small-company disclosures) up to very large private groups. Its own logic is proportionality: IFRS-derived principles, simplified. And it just changed substantially: for periods starting in 2026, the periodic-review amendments bring most leases onto the balance sheet (the operating/finance distinction is gone for lessees, with short-term and low-value exemptions) and rebuild revenue recognition around a five-step model. Companies with property leases, vehicle fleets or complex contracts are working through the transition in this year's accounts — gearing ratios, EBITDA and covenant calculations all move, which is a conversation to have with lenders before the accounts arrive rather than after (our FRS 102 transition guide covers the programme).
FRS 105 is the micro-entities regime: for companies under two of turnover £1 million, balance sheet £500,000 and 10 employees, it offers radically minimal accounts — no deferred tax, no fair values, near-zero notes. Cheap and legitimate, with sharp limits: no revaluations (a problem for property companies), and accounts so thin that lenders, investors and credit insurers routinely ask for more anyway. Choosing FRS 105 to hide information usually just relocates the disclosure into side requests.
How the choice actually gets made
For a subsidiary of an IFRS group: FRS 101 versus FRS 102 turns on whose numbers you want to maintain. FRS 101 means the group reporting pack and the statutory accounts share one IFRS basis — no GAAP-difference reconciliations, which after the 2026 FRS 102 changes matters less than it did (leases now land on both balance sheets) but still avoids two rulebooks. FRS 102 can suit subsidiaries whose group is on IFRS but whose local operations are simple. Either way the choice is per-entity and revisitable.
For a standalone company: FRS 102 is the default, with Section 1A trimming disclosures for small companies — now a much bigger club, since the size thresholds rose in April 2025 to turnover £15 million and balance sheet £7.5 million, carrying audit exemption with them for most. FRS 105 is worth its savings only for genuinely simple micro businesses with no external readers of the accounts.
One horizon point for small and micro companies weighing minimal filing as a virtue: under the Companies House reforms, from April 2028 small and micro companies must file their profit and loss account (with software-only filing), abolishing today's filleted-accounts privacy. An opt-out from public display is promised for the P&L, but the era of choosing a framework partly for what it keeps off the register is winding down — choose for the users of the accounts, not the absence of them.
Switching, and the traps between frameworks
Transitions between frameworks are permitted and routinely sensible — the micro that outgrew FRS 105, the acquired company aligning to its new parent — but each is a conversion exercise with restated comparatives, and some moves carry surprises: FRS 105's prohibition on revaluation means an investment property company moving up to FRS 102 suddenly recognises fair value movements through profit; deferred tax appears from nowhere; lease liabilities materialise under the 2026 rules. The common thread of framework mistakes we repair is drift — a company that chose its GAAP a decade ago for reasons nobody remembers, now mis-sized for what the business became.
Acumon prepares accounts under all four regimes — FRS 102, FRS 105, IFRS and FRS 101 — and runs framework reviews and conversions through our financial reporting team. If your accounts framework predates the 2025 size thresholds and the 2026 amendments, this year end is the natural moment to check the choice still fits.