Company directors will need to verify their identity

Company directors will have to start verifying their identities as new legislation comes into force.

Identity verification becomes compulsory for directors and people with significant control who are incorporating a company from 18 November 2025.

A transition period of 12 months for existing companies begins on the same date, with verification required when confirmation statements are due.

Business Data Group founder Richard Osborne campaigned for the introduction of proof of identification:

“It’s good to see it coming in. It combats fraud. It makes it more difficult for companies to be used as a vehicle for illicit money or defrauding people.”

The changes are expected to impact seven million individuals. They’re part of reforms to the way Companies House is operated, introduced by the Economic Crime and Corporate Transparency Act.

The number of businesses registered with Companies House has been increasing for over a decade.

Aaron Asadi, CEO of Enterprise Nation, pointed out that the growth mirrors our annual Start Up Ambition report, which found that just under half of all UK adults now want to start a business at some point in their career.

"But we’re now at a point where friction-free registration is eroding some trust. So raising the bar to entry is something we welcome.”

Verifying your identity without a smart phone

Identification checks will be carried out using smart phones. This led to fears about accessibility for directors who don’t have access to the technology.

However, Authorised Corporate Service Providers can now register with Companies House and carry out the verification process. That includes organisations like company formation agents, solicitors  and accountants.

Small companies forced to file detailed accounts

The Act also removes the option for small companies and micro-businesses to file abridged accounts:

Micro-entities (turnover of £632,000 or less) will be required to file a copy of their balance sheet and profit and loss account.

Small companies (turnover of £10.2m or less) will be required to file a copy of balance sheet, directors’ report, auditor’s report (unless exempt) and profit and loss account.

The full definition of the criteria for Micro-entities and small companies is available on the gov.uk website.

The new requirement to file profit and loss accounts means there will be a significant amount of additional financial information available to the public.

This raised concerns that competitors could see company margins and larger suppliers may use the information as leverage.

Richard says that while the change may be unpopular with some business owners, the increased transparency reduces risks:

“In return for having the level of protection that operating a limited company offers, there has to be some give and take. As a business owner you’re producing this financial information for HMRC anyway, it’s not extra work, it’s just that it’s being published online. People can see the profitability and be confident.”

The changes to the way accounts are filed are scheduled to come into effect from 1st April 2027.

However, the Financial Times reported that the requirements may be dropped as part of the government’s effort to cut red tape.

Additional enforcement powers

The new legislation gives Companies House a “more significant role in disrupting economic crime”, which includes additional powers:

• greater powers to query information and request supporting evidence

• stronger checks on company names

• new rules for registered office addresses

• a requirement for all companies to supply a registered email address

• the ability to annotate the register when information appears confusing or misleading

• taking steps to clean up the register, using data matching to identify and remove inaccurate information

• sharing data with other government departments and law enforcement agencies

Background reading

• Companies House changes to come into effect on 4 March 2024 (Enterprise Nation article)

• Economic Crime and Corporate Transparency Act: What small businesses need to know (Enterprise Nation article from 2023)