What does fixed assets mean on a balance sheet?
What are fixed assets?
Fixed assets are the things a company owns to run its business rather than to sell or turn into cash. The Small Companies Regulations define them as "assets of a company which are intended for use on a continuing basis in the company's activities". Anything not held on that basis is a current asset.
The test is intention, not the type of item. A van used for deliveries is a fixed asset for a plumber; the same van is stock for a car dealer.
The three kinds of fixed assets
The statutory balance sheet format (heading B) splits fixed assets into three groups:
| Group | Typical contents |
|---|---|
| I. Intangible assets | Goodwill bought with a business, software licences, patents, trademarks |
| II. Tangible assets | Land and buildings, plant and machinery, vehicles, fixtures, computers |
| III. Investments | Shares in subsidiaries, loans to group companies, other long-term investments |
Goodwill can only be shown if it was bought, not for a company's own reputation.
Where it sits on the balance sheet
Fixed assets are the first main heading on a UK balance sheet, after the rarely used "called up share capital not paid". The order in Format 1 of Schedule 1 to the Small Companies Regulations (SI 2008/409) is: fixed assets, current assets, creditors due within one year, net current assets, then total assets less current liabilities.
How much detail you see depends on the accounts type:
- Small company accounts (FRS 102 Section 1A): the balance sheet shows intangible, tangible and investments as separate lines, with a note listing cost, additions, disposals and depreciation.
- Micro-entity accounts (FRS 105): the micro-entity format has a single line, "Fixed assets", with no split. You cannot tell whether £50,000 is a building, a van or goodwill.
Depreciation: why the figure falls each year
A fixed asset with a limited useful life must be written down systematically over that life, after allowing for any residual value. The balance sheet figure is therefore net book value: cost less accumulated depreciation, not what the asset would sell for today.
Land is not usually depreciated because it does not wear out. Intangibles such as software are amortised, which is the same idea under another name.
Worked example
Example (illustrative figures, not a real company):
| Fixed asset | Cost £ | Depreciation to date £ | Net book value £ |
|---|---|---|---|
| Delivery van | 30,000 | (12,000) | 18,000 |
| Computers | 6,000 | (4,000) | 2,000 |
| Software licence | 10,000 | (5,000) | 5,000 |
| Fixed assets | 25,000 |
A micro-entity with these assets prints only "Fixed assets 25,000". A small company would show "Intangible assets 5,000" and "Tangible assets 20,000" and give the cost table in a note. Next year, with no new purchases, the figure falls as depreciation continues.
What it tells a credit checker
Fixed assets show what a company has invested in, but they are a weak cushion for an unsecured creditor. Specialist equipment sells for far less than book value, and property is often already charged to a bank. Check the charges register before counting a building as security for your invoice.
Our data shows how many small companies have little to lean on here. Of 3,575,087 active companies whose latest machine-readable accounts end on or after 1 January 2024, 41.7% report a positive fixed assets figure; the median among them is £14,681, and a quarter hold £2,045 or less. Liquidity is the bigger concern: 36.2% of these companies show net current liabilities, as set out in our negative net assets data.
A large intangible figure in a small company is worth a question. To see how a company's fixed assets have moved across its past filings, search the company.
Sources
- The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008, Schedule 1 (balance sheet formats, micro-entity formats, depreciation rules)
- The Small Companies and Groups (Accounts and Directors' Report) Regulations 2008, Schedule 8 (definition of fixed and current assets)
- GOV.UK: Prepare annual accounts for a private limited company
FAQ
Is a fixed asset the same as a non-current asset?
Yes, in practice. "Fixed assets" is the term used in UK Companies Act accounts under FRS 102 and FRS 105. Companies using international accounting standards call the same group "non-current assets", usually split into property, plant and equipment, intangible assets and investments. The meaning is the same: assets held for continuing use rather than for sale.
Why do micro-entity accounts show only one fixed assets figure?
The micro-entity balance sheet format in the regulations lists fixed assets as one heading with no sub-items. Micro-entities may also file no notes beyond the few required, so the split between property, equipment and intangibles is not public. If you need the detail, you have to ask the company or rely on other sources.
Can fixed assets be shown at market value?
Sometimes. The alternative accounting rules in the regulations let tangible fixed assets be included at market value or current cost, with the uplift credited to a separate revaluation reserve under capital and reserves. Most small companies keep cost less depreciation. If you see a revaluation reserve, part of the net assets comes from a valuation rather than money spent.
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