Key Companies House changes: what and when?

The new powers granted to Companies House signify a significant milestone in the transformation of UK company law. These changes demand compliance, while giving accountants the opportunity to remind clients of the importance of strengthening their corporate governance practices and fostering a culture of transparency, says Jonathan Barber, Executive Director – UK, of the Institute of Financial Accountants (IFA). The Economic Crime and Corporate Transparency Act (ECCT) will affect companies, partnerships, and directors, with reforms being gradually introduced between 1 March this year until 2026. The Act is designed to strengthen the functions of Companies House and increase corporate transparency in order to tackle economic crime and facilitate growth through the enhancement of company information. Consequently, there will be greater responsibilities placed on all new and existing registered company directors, people with significant control of a company (PSCs) and anyone who files on behalf of a company. Some of the key changes to impact clients are: Lawful purpose statement Clients must now confirm that their company is being established for lawful purposes if they choose to incorporate it. Furthermore, they must ensure that the activities their company plans to undertake are also lawful by including this information in the confirmation statement. Any documents that do not contain a statement of lawful purposes will not be accepted. To underline the importance of compliance with the law, this change has been introduced. It is imperative for all registered companies to conduct their operations within legal limits. In the event that Companies House receives any indications suggesting otherwise, suitable measures may be taken. For companies that are already established, it is mandatory to include a statement of lawful purpose while submitting their initial confirmation statement. This statement should have a date on or after 5 March 2024. Registered email address Effective as of 4 March, all companies are now mandated to provide Companies House with a registered email address. Companies House will use this email address for official correspondence but won’t be shared on the public register. Failure to uphold a proper registered email address will constitute an offence. Registered Offices Businesses must now provide a legitimate physical address on the companies register, rather than a PO Box. This necessitates that companies maintain a suitable address as their official registered office. An address from a third party, such as an accountancy office, can serve as a registered office address if it fulfils the criteria for being deemed an 'appropriate address'. Identity verification measures The ECCT Act is set to implement new identity verification measures by the end of 2024, requiring individuals involved in UK businesses to comply with the updated regulations. This will allow them to verify their identity ahead of time, improving data accuracy for both new and existing directors. Authorised Corporate Service Providers (ACSPs) are eligible to begin the application process for authorisation to verify the identity of their clients. Each individual ACSP must undergo identity verification in order to obtain authorisation. Starting in spring 2025, the implementation of IDV will continue, beginning with directors and PSCs. Existing directors and PSCs will have a 12-month transition period, and all filings will be required approximately six months after that. The reforms for limited partnerships will be synchronised, allowing for a six-month transition period that aligns with the completion of the transition for directors and PSCs. Consequently, anyone filing on behalf of a company will need to verify their identity. Company ownership In order to encourage transparency, more shareholder details must be provided to Companies House, and limitations will be imposed on the appointment of corporate directors. Companies House fees Starting from 1 May, there will be adjustments made to the fees in order to consider new future expenses and ensure the recovery of costs from current expenditures. For a comprehensive list of fees related to company incorporation and registration, please refer to the Government website. Further changes afoot Companies must begin getting ready for changes to financial statements concerning small and micro entities. With the new regulations, both will have to submit their profit and loss accounts. The objective of making essential details such as turnover and profit or loss accessible on the public register is to assist creditors and consumers in making more informed choices. Additionally, this will enhance the value of the information on the register for users. Companies reliant on an audit exemption must supplement it with a director's statement on the balance sheet, verifying the exemption being used and confirming the company's compliance with the qualifying conditions. The shift to digitisation will be complete, becoming mandatory and eliminating the paper filing option for the majority of businesses and mandating that accounts are filed digitally. They will also need to be fully tagged with iXBRL software, which involves applying computer-readable tags to business data. The software’s implementation will increase transparency, traceability, and validation of accounts submissions, aiding in the fight against economic crimes and offering additional information for enforcement agencies and the general public. Companies House will be sending notifications to all impacted businesses by early 2026, which is 21 months prior to the implementation of the new requirements. For further information on the new changes, visit: Changes to UK company law - Changes to UK company law Changes at a glance - Changes to UK company law Companies House changes