Why property investors like Micro Entity Accounts 6


Micro Entity

A company meets the qualifying conditions for a micro-entity if it meets at least two out of three of the following thresholds:

  • Turnover: Not more than £632,000
  • Balance sheet total: Not more than £316,000
  • Average number of employees: Not more than 10

There are approximately 1.56 million micro-entities in the UK, as compared with a total number of companies on the UK register of approximately 2.8 million.

Most property businesses will have less than 10 employees and less than £632,000 turnover.

If you are a property investor filing Abbreviated or Full Accounts you have to report property values at their fair value, which means you tell everyone what you think the property is worth. You may not want to do that, especially if you are planning to sell as it tells the potential buyer what you think its worth and that might be an issue in negotiations.

Under the Micro Entity regime you aren’t allowed to use fair value and have to use Historical Cost. Which most Property Investors will prefer.

No notes are required with Micro Entity Accounts and any advances or financial commitments are shown at the foot of the Balance Sheet, often this is simply the value of the Mortgage outstanding.

steve@bicknells.net

6 comments

  1. Admiring the hard work you put into your website and in depth information you provide.
    It’s good to come across a blog every once in a while that isn’t the same old rehashed material.
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  2. Pingback: Now we have Deferred Tax on Investment Properties! « Steve J Bicknell

  3. Steve, wouldn’t the ‘balance sheet total’ criterion going to spike the use of micro-entity accounts for all but the smallest of investors? £316,000 isn’t much of a hurdle when you’re talking about property costs.

      • I see (and sorry for the ungrammatical question – the dangers of editing on the fly). So it may work to have individual companies for smaller value properties, though I imagine even for mid-size properties, particularly in the South East, there would be no choice but to go for full reporting.

  4. Pingback: Now we have Deferred Tax on Investment Properties! « Business Accountant

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