Many people assume creating a UK company is a straight forward and easy process. And, to a large extent it still is, especially when you compare to the compliance requirements with other countries such as Spain, Greece, Germany, UAE and so on.
However, Companies House and HMRC are tightening their belt to introduce significant changes. These significant changes to the process of incorporation in the UK are being introduced in phases under the Economic Crime and Corporate Transparency Act 2023.
These reforms aim to improve data quality, prevent fraud, and enhance transparency by moving Companies House from a passive registrar to a more active, investigative role.
Key changes currently in force (as of March 2024) and upcoming (2025-2026) are outlined below:
1. Key Changes in Force (From March 4, 2024)
Lawful Purpose Statement: Subscribers must now formally confirm upon incorporation that the company is being formed for a lawful purpose.
Registered Email Address: All new companies must provide a registered email address for official communication, which will not be published on the public register.
Registered Office Address: Companies must use an “appropriate address,” meaning a PO Box is no longer acceptable.
Enhanced Query Powers: Companies House has greater power to challenge, reject, or request evidence for information that appears incorrect, fraudulent, or inconsistent.
Company Name Restrictions: Stricter checks on company names to prevent them from being used to mislead or facilitate fraud.
Increased Fees: Filing fees increased from 1 May 2024 to fund these new measures.
2. Upcoming Changes (2025 and Beyond)
Mandatory Identity Verification (Autumn 2025): All new and existing company directors, people with significant control (PSCs), and anyone filing on behalf of a company will be required to verify their identity with Companies House.
Authorised Corporate Service Providers (March 18, 2025): Third-party agents must register as an Authorised Corporate Service Provider (ACSP) to file on behalf of clients.
Changes to Accounts (Future): Software-only filing for all accounts will be mandated, and the option to file abridged accounts for small companies will be removed.
Incorporation Relief (April 6, 2026): For property owners, transferring a business to a company will require a formal claim for tax relief in a Self-Assessment return, rather than it being automatic.
Summary of Impact on Process
Increased Scrutiny: Filings will be more closely reviewed, leading to potentially longer processing times if information is queried.
Proactive Compliance: The onus is on founders to ensure accurate information and valid, non-PO box addresses.
Preparation Needed: When setting up a company, founders should now prepare for identity verification steps for all key individuals.
It’s more important than ever business owners and property investors review the strength of their compliance and are given the latest tax advice in a fast paced and changing compliance and tax landscape.