Changes to identity verification for directors

ID Check

Identity verification is being phased in over 12 months to provide enough time for companies and directors to get signed up. The government estimates that 6 to 7 million individuals will need to verify their identity by mid-November 2026.

Anyone who fails to complete an ID check when required will be breaching the law, and they and their company/LLP could face a large fine or criminal prosecution, or be denied the opportunity to register new entities with Companies House in the future.

The new check is being introduced under The Economic Crime and Corporate Transparency Act 2023, which ushered in robust new laws to tackle economic crime and deliver a more reliable companies register to underpin business activity.

The Act – introduced by former Home Secretary, Priti Patel, in the aftermath of Russia’s invasion of Ukraine – was intended to crack down on the money laundering operations of Russian oligarchs and others by imposing more transparency on offshore companies that own property in the UK.

It also gave the government powers to stamp out misuse of the UK’s register of companies and directors, known as Companies House.

A voluntary version of the check has operated since 8 April. According to Companies House, more than 1 million individuals have already verified their identity since the voluntary service was rolled out.

Andy King, chief executive of Companies House, said: “One million identities verified is an important milestone, but it’s only the beginning. Identity verification will help make sure that the people setting up, running and controlling companies are who they say they are. This will make our data more reliable and less open to misuse, supporting a more transparent and trusted business environment.”

Registering

Directors can validate their personal information through two different avenues – directly through the Gov.uk One Login app or online account, or via an Authorised Corporate Service Provider (ACSP).

ACSPs are professionals or businesses that are required to follow anti-money laundering (AML) regulations set by their relevant authorising bodies. These include accountants, solicitors, chartered secretaries, and government officials.

An ACSP can carry out the digital ID verification on behalf of a director and confirm the outcome with Companies House.

Those using the Gov.uk One Login app will need to create an account and will then need a passport, driving or provisional license and documents with proof of current address, like a bank statement or utility bill, to complete the verification process.

It’s also worth noting that from 1 February 2026, Companies House will be updating its fees for digital filings. Incorporation will cost £100, confirmation statements £50, and voluntary strike-offs £13 when submitted digitally. These changes will help fund the delivery of the new digital ID verification system and other services under the Economic Crime and Corporate Transparency Act 2023 – as well as the ongoing running of Companies House’s core operations.

Business Support

The ID scheme has divided opinion, with some saying it is an invasion of privacy that potentially leaves personal data vulnerable to hackers.

The government insists the ID checks will boost business and support economic growth by giving more assurance about who is setting up, running and controlling UK companies. Ministers say that companies of all sizes will benefit from more accurate and trustworthy register data and greater protections against fraud.

It is certainly the case that economic crime remains a significant problem, with fraud being the most prevalent crime against individuals in England and Wales and a high rate of incidents against businesses. For individuals, fraud accounted for an estimated 41% of all crime in the year ending September 2024, with a high percentage of these cases being cyber-enabled. For businesses, 64% experienced fraud, corruption, or other economic crime in the two years leading up to a 2022 survey by PwC.

The Home Office’s Economic Crime Survey 2024 found that one in four businesses with employees (27%) experienced fraud in the 12 months prior to the survey, equating to approximately 389,000 businesses.

In a recent IoD Policy Voice Survey, we asked our members if they support mandatory identity verification checks for all newly appointed directors and PSCs. The results, from 500 respondents, were pretty emphatic, with 74.7% in favour of the checks, 19% against and 6.3% undecided.

Nonetheless, many members have highlighted practical difficulties with the current One Login system, describing it as confusing, clunky, and occasionally unreliable. Members who run SMEs have also noted the increased regulatory burden this will cause those with limited resources. So, whilst there is broad support for the policy, it’s clear that smoother navigation and clearer guidance will be key to ensuring the system works effectively for businesses of all sizes.

Similarly, results from a YouGov business Omnibus survey targeting 1,000 senior decision-makers of companies from across Great Britain show that 81% of respondents supported the implementation of a new identity verification process – support has been above 80% since November 2024.

Security Risk?

Any new scheme that requires individuals to give up their personal details, to be stored on a database, is always going to raise concerns about privacy and the risk of fraud.

Companies House insists ID verification will play “a key role in improving the quality and reliability of our data and tackling misuse of the companies register”.

However, Michael Perez, director at managed service provider Ekco, warned in Infosecurity Magazine in August that the One Login ID verification service, used by the government, is itself a security risk.

He said: “Requesting millions of individuals to submit sensitive identity documents via a platform that hasn’t fully adopted secure-by-design principles introduces significant risk.

It concentrates vulnerability and could expose users to breaches at a time when public confidence in digital systems is already under pressure.”

Additionally, Jonathan Frost, director of global advisory EMEA at BioCatch, told the magazine that the 12-month rollout of the scheme leaves “a clear window for criminals to abuse”.

He added: “Companies House must act swiftly to introduce robust controls to close this window of vulnerability and prevent serving as a gateway for fraudulent filings that undermine the integrity of bank due diligence and facilitate economic crime.”