No ID, No Entry: new Companies House identity verification requirements will have major implications for directors and PSCs

Verification of the identity of company directors and persons with significant control (PSCs) is undergoing a material change as part of the implementation of the Economic Crime and Corporate Transparency Act 2023 (the “ECCTA”). This change is set to impact millions of officers and PSCs registered at Companies House.

The ECCTA is set to broaden the responsibilities of Companies House to a considerable extent, establishing them as an assertive gatekeeper and regulator of company information. One of the key objectives of this legislation is to prevent individuals from abusing the registration framework by setting up companies and using them to perpetrate economic crime.

As a result of these reforms, all new and existing company officers will become subject to more stringent requirements. Companies House will be instrumental in promoting company transparency through new compulsory identity verification requirements being introduced in 2025/26.

Companies House Reforms: At a Glance

• 18 March 2025: Authorised Corporate Service Provider can be registered.
• 8 April 2025: new identity verification requirements come into effect on a voluntary basis.
• Autumn 2025: mandatory identity verification for all new company directors on incorporation of new company or appointment to existing company
• 12-month transition period: existing directors and PSCs will have a year to comply with the new requirements and so will be required to have completed identity verification by Autumn 2026.

Who will be affected?

These enhanced checks are designed to make it challenging for individuals to set up and operate companies using fictitious or fraudulent identities. They will apply to all new and existing directors, PSCs and any individuals who file information on behalf of a company. It is expected that in Autumn 2025, it will become compulsory for all directors and PSCs of newly incorporated companies to verify their identity at the point of incorporation.

There will be a transition period of 12 months for existing companies who will be required to provide identity verification credentials for their directors and PSCs when their confirmation statement is due.

How to verify your identity

There will be two routes to identity verification. The first option is to complete the process directly through Companies House using a primary identification document, such as a passport or driving licence. The individual will take a picture of their ID, then a picture of themselves and submit both to Companies House. Companies House will use facial recognition technology to compare the images and determine whether the individual’s identity can be verified. Companies House has confirmed that from 25 March 2025, individuals will be able to voluntarily verify their identity directly through Companies House before it becomes mandatory. The alternative route to identity verification will be rolled out in Spring 2025. This will enable organisations engaged in anti-money laundering supervised activity, such as law firms and accountants, to register as Authorised Corporate Service Providers (ACSPs). These agents will be authorised to conduct identification checks for individuals and submit a verification statement to Companies House, confirming the individual’s identity.

At present, a company must notify Companies House of a change in director within 14 days. Significantly, the new identification requirements will impose an additional responsibility on the company, to ensure the new director’s identity has been verified within these 14 days. The good news is that identity verification is intended to be a one-time process; once an individual is verified as a director or PSC, this verification is valid across all relevant companies.

Penalties for failing to comply with new identity checks

Companies House will have the authority to impose substantial penalties on both individuals and companies that fail to comply with the identity verification requirements.

Individuals who do not verify their identity as required by law may face criminal proceedings, which could result in a level 5 fine (ie unlimited) and civil penalties may be issued by the Registrar of Companies. Anyone responsible for filing company information who does not adhere to the new requirements, could be prohibited from submitting filings on behalf of the company. The Companies House public register will be annotated to indicate the unverified status of any director or PSC, potentially harming the company’s business reputation. Companies will be obliged to ensure that no individual undertakes any duties of a director without being identified. Should the Company allow a director to act without first ensuring that their identity is verified, both the Company and the existing officers of the company will be committing an offence. Furthermore, unverified directors could face disqualification from future directorships, and a company with an unverified director will be committing a criminal offence.

If you have any queries about the new reforms under the ECCTA will impact you or your business, please contact Rosie Timoney, Senior Associate in our Corporate Governance and Advisory team.

*This information is for guidance purposes only and does not constitute, nor should be regarded, as a substitute for taking legal advice that is tailored to your circumstances.