Why we ask for fewer expense figures than other software

Where your costs go in our fields

In Financial data → Profit & loss, enter your prepared category totals. For mixed trading and property activity, use each activity’s own expense rows.

Prepared materials and consumables total

Cost of raw materials and consumables

Use materials, stock and consumable goods used in what you sold. Subcontractors and freelancers who invoice the company normally belong in Other charges unless what you bought is genuinely materials.

Prepared payroll total

Staff costs

Include payroll wages, director salary, employer National Insurance and employer pension contributions. A director paid only in dividends has no staff costs.

Prepared depreciation and write-offs

Depreciation and amounts written off assets

Do not also include this charge in Other charges. This row feeds the automatic tax add-back.

Remaining operating expenses

Other charges

Use this for remaining running costs such as rent, insurance, software, accountancy or audit fees, marketing, office supplies, bank charges and travel. Exclude amounts entered in the other rows.

Prepared qualifying charitable donations

Charitable donations

Enter the amount once in its separate row. Do not repeat it in Other charges. You determine whether the payment qualifies.

Non-deductible part of entered costs

Tax adjustments → Disallowable expenses

Enter only the amount your tax working adds back. It does not replace the accounts expense.

Please do not fold depreciation into administrative expenses. If you do, your accounts will still balance and your profit will still look right, but the add-back has nothing to work from and your Corporation Tax will be wrong. It is the one place where summarising too far causes a real problem, and it is worth checking before you submit. Your tax computation, which you can download before filing, shows the add-back as its own line so you can confirm it.

Some costs sit in your accounts but are never deductible, such as client entertaining and fines. Those are handled separately. See disallowable expenses. For the separate donation row and its tax treatment, see charitable donations.

The lines company law requires

The micro-entity profit and loss account has a fixed format, set by the Small Companies and Groups (Accounts and Directors' Report) Regulations 2008 and reflected in FRS 105. Paragraph 5.3 on page 21 of the September 2024 edition shows the required income statement format. Paragraph 5.2 confirms that extra information is permitted but is not required. The minimum headings are: Turnover, Other income, Cost of raw materials and consumables, Staff costs, Depreciation and other amounts written off assets, Other charges, Tax, and Profit or loss.

These are presentation headings, not instructions to invent an amount. Where the company has a value, it must be reported under the correct heading. Our wizard follows this statutory structure and only asks for separate supporting figures where they are needed to calculate tax or put an amount in the right place.

Staff costs means everything the company paid through payroll: wages and salaries, including a director salary, employer National Insurance, and employer pension contributions. Dividends are not staff costs, and neither are subcontractors or freelancers who invoice the company. Because it is a normal deductible expense, showing it separately does not change your Corporation Tax by a penny. It only changes where the amount appears in your accounts.

Why other software asks for more

Software that prepares full statutory accounts builds them from a detailed breakdown. That is why it walks you through category after category: it is assembling something close to a trial balance.

We prepare micro-entity accounts under FRS 105. The layout of those accounts is fixed by company law and is deliberately brief. A micro-entity reports a small number of summary figures rather than an itemised list, which is the whole point of the regime: the smallest companies get the shortest accounts. Asking you to split out audit fees from office supplies would produce two numbers we would then have to add back together before filing. The one split the law does require, payroll costs on their own line, is the one we ask for.

What each regulator actually receives

This is the part most customers do not expect, and it is the strongest reassurance we can give you. The two regulators do not receive the same document.

• Companies House receives filleted accounts by default, without the profit and loss account. Where that option is shown on the filing page, you can instead choose to publish the full accounts, including the profit and loss account. Choosing full accounts makes those income and expense totals public. See what company accounts are public for the current rules and separately dated future changes.
• HMRC receives your Corporation Tax return and a fuller set of accounts, which do include a profit and loss account showing the statutory lines above: turnover, cost of raw materials and consumables, staff costs, depreciation, other charges, interest and tax. We also report your average number of employees.

What the CT600 itself asks for

The Corporation Tax return has no box for audit fees, none for office supplies, and none for any other expense category. It asks for totals. Your turnover goes in box 145 and your trading profit in box 155, and the rest of the return deals with adjustments, allowances and reliefs rather than with how you spent the money.

So a return prepared from totals is not a lesser version of one prepared from a long list. It is the same return, and the boxes HMRC reads are identical either way.

What you still have to keep

Filing summarised figures does not mean you can keep summarised records. The company must still be able to show what the totals are made of. HMRC can open an enquiry into your return, normally within 12 months of the date you file, and can ask to see the underlying detail. Keep your bookkeeping, invoices and payroll records as you always would.

The practical test is simple: if someone asked you next year what made up your Other charges figure, you should be able to answer from your records, even though that breakdown was never submitted.

When you need more than this

Micro-entity accounts are not for every company. If your company exceeds the micro-entity size limits, or you need itemised accounts for a lender or an investor who expects to see the categories, you need FRS 102 Section 1A accounts, which we do not prepare. That means an accountant or software that produces full accounts. See which company types we support.

For the same reason we do not ask you to choose audit settings, because the answers are fixed for this kind of filing, see audit exemption for micro-entity accounts.

This article is general guidance, not tax or accounting advice. If you are unsure which field one of your costs belongs in, or whether your company still qualifies as a micro-entity, speak to an accountant before you file.