Companies House has been given new powers, marking a big step in changing UK company law. Businesses need to be aware of these changes to improve their corporate governance and promote transparency.
The Economic Crime and Corporate Transparency (ECCT) Act will have an impact on companies, partnerships, and directors, with reforms being implemented gradually from 1 March this year, until 2026. The purpose of the Act is to strengthen Companies House and promote corporate transparency. This is aimed at combatting economic crime and supporting company growth by improving company information. As a result, new and existing registered company directors, people with significant control of a company (PSCs), and those who file on behalf of a company will have increased responsibilities.
Companies will be affected by several important changes:
Starting from 4 March, all businesses must now give Companies House an official email address. Companies House will use this email for official communication, but it won't be made public. Not having a valid email address will be considered a violation.
Businesses are now required to have a valid physical address on the companies register instead of a PO Box. This means that companies need to have a suitable address as their official registered office. If a third-party address, like an accountancy office, meets the requirements of an 'appropriate address', it can be used as a registered office address.
Companies are required to confirm that they are being established for legal purposes if they decide to incorporate it. Additionally, they need to make sure that the activities their company intends to carry out are also legal by including this information in the confirmation statement. Any documents lacking a statement of legal purposes will not be accepted.
Established companies must include a statement of lawful purpose in their initial confirmation statement with a date on or after 5 March 2024. Emphasising the need to follow the law, if Companies House receives any signs of non-compliance, appropriate actions may be taken.
To promote transparency, Companies House requires additional shareholder information and will restrict the appointment of corporate directors.
Effective as of 1 May, fees have now changed to cover new expenses and recover costs. A full list of fees for company registration is available on the Government website.
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Identity verification measures
The ECCT Act will introduce new identity verification measures by the end of 2024. UK business individuals must follow the updated regulations to verify their identity in advance, improving data accuracy for all directors. From spring 2025 onwards, the Identity Verification (IDV) implementation will proceed, starting with directors and PSCs. The current directors and PSCs will be given a 12-month transition period, and all necessary filings will be mandatory approximately six months after that. The reforms for limited partnerships will be synchronised, allowing for a six-month transition period that coincides with the completion of the directors and PSCs transition. As a result, anyone submitting filings for a company will be required to verify their identity.
More changes on the horizon
Businesses need to start preparing for adjustments to financial statements for small and micro entities. Under the new rules, they will both need to file their income and expense reports. The aim of providing key information like revenue and profit or loss on the public record is to help creditors and customers make better decisions. This will also improve the usefulness of the information on the record for users.
Organisations, including SMEs, that rely on an audit exemption need to include a director's statement on the balance sheet, confirming the exemption and ensuring that the company meets all the necessary conditions.
Digitalisation will soon come into full effect, removing the option for paper filing for most businesses and making it necessary to file accounts digitally. Businesses will also have to use iXBRL software to tag their data, making it easier for computers to read. This software will improve transparency, traceability, and validation of account submissions, helping to combat economic crimes and providing more information for authorities and the public.
By early 2026 Companies House will send notifications to all affected businesses, 18 months before the new requirements are implemented.
Tim Pinkney, Director of Professional Standards
The Institute of Financial Accountants (IFA)
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Changes to UK company law - Changes to UK company law
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