For most company directors, the new Companies House identity verification requirements are little more than an administrative exercise.
The process is straightforward, can usually be completed online in a matter of minutes, with most directors not needing professional assistance to complete it. However, for those starting a new business or taking new directorships, failing to do so could create unexpected complications elsewhere in the business, including payroll administration and compliance.
As part of the Economic Crime and Corporate Transparency Act, Companies House has introduced mandatory identity verification for company directors and People with Significant Control (PSCs). The reforms are designed to improve the accuracy of the Companies House register and to reduce fraud. Existing directors are being asked to verify their identity, while new directors must verify their identity as part of the incorporation or appointment process.
Why does this matter?
For many business owners, identity verification may seem like a Companies House issue rather than a payroll concern. In reality, the two are becoming increasingly linked.
When a new company is incorporated, Companies House information is shared with HMRC to facilitate the creation and management of tax records, including PAYE schemes. Where director information has not been properly verified, businesses may experience delays or difficulties when registering and verifying payroll schemes and associated tax accounts.
This creates a practical problem. Employees still need to be paid and payroll can continue to operate. However, if PAYE records are not established or verified correctly, employers may find themselves unable to make RTI submissions or PAYE payments in the usual way or encounter delays in dealing with HMRC. In some cases, this could increase the risk of late payment interest, late filing penalties or additional administration.
For established businesses, the risk may be limited. For newly incorporated companies, fast-growing businesses and group structures regularly creating new entities, it is something that should be on the compliance checklist from day one.
What directors need to know
The good news is that identity verification is not particularly onerous.
Most directors can verify their identity directly through Companies House using a GOV.UK One Login account and a suitable form of identification, such as a passport. In most cases, individuals only need to verify their identity once and will then receive a unique Companies House personal code that can be used across multiple company roles.
However, businesses should not assume that because a director has previously completed verification for one company, no further action is required when establishing a new business. The Companies House personal code and verification details still need to be correctly linked to each new appointment and company role.
A practical checklist for businesses
Business owners, finance teams and payroll professionals should consider the following:
Ensure all existing directors have completed identity verification or understand when they will be required to do so.
When forming a new company, make identity verification part of the incorporation process rather than an afterthought.
Check that newly appointed directors have obtained their Companies House personal code.
Consider the interaction between Companies House filings, HMRC registrations and payroll setup when planning new business ventures.
Keep payroll providers and advisers informed if there are delays or issues with director verification.
Prevention is better than cure
Identity verification is one of the most significant changes to UK company administration in decades. While the process itself is relatively simple, overlooking it could lead to wider compliance issues, particularly where payroll and PAYE registrations are involved.
For new growing businesses, the message is clear: treat director identity verification as an essential part of company setup and governance. A few minutes spent completing the process today could help avoid unnecessary payroll and tax complications tomorrow.
For further information contact our payroll team here.
What is the new Companies House identity verification requirement?
Companies House has introduced mandatory identity verification for company directors and People with Significant Control (PSCs) as part of the Economic Crime and Corporate Transparency Act. The aim is to improve the accuracy of the Companies House register and help reduce fraud by ensuring individuals can verify their identity before holding certain company roles.
Who needs to complete Companies House identity verification?
Existing company directors are being asked to verify their identity, while new directors must complete identity verification as part of the incorporation or appointment process. The requirement also applies to People with Significant Control (PSCs) who meet the relevant ownership or control criteria.
Why can director identity verification affect payroll administration?
Director identity verification can affect payroll because Companies House information is shared with HMRC when a new company is incorporated. If director details have not been properly verified, businesses may experience delays when establishing or verifying PAYE schemes and related tax accounts.
What payroll issues could arise if director verification is not completed?
Businesses may encounter difficulties registering payroll schemes, making Real Time Information (RTI) submissions or managing PAYE payments in the usual way. Delays may also increase the risk of late payment interest, late filing penalties and additional administrative work when dealing with HMRC.
How do directors complete identity verification with Companies House?
Most directors can verify their identity directly through Companies House using a GOV.UK One Login account and an accepted form of identification, such as a passport. In most cases, the process only needs to be completed once and results in the issue of a unique Companies House personal code.
What is a Companies House personal code?
A Companies House personal code is a unique identifier issued after identity verification has been completed. The code can be used across multiple company roles, helping Companies House link verified individuals to their directorships and appointments.
If a director has already verified their identity, do they need to do anything when joining a new company?
Yes. Although identity verification is usually completed only once, businesses should ensure the director’s Companies House personal code and verification details are correctly linked to each new appointment and company role. Verification completed for one company does not automatically remove all administrative requirements for future appointments.
Which businesses face the greatest risk from verification delays?
Newly incorporated companies, rapidly growing businesses and organisations that regularly establish new entities are most likely to be affected. These businesses often rely on prompt PAYE registration and payroll setup, making delays in director verification more likely to create operational and compliance issues.
What should businesses include on their director verification checklist?
Businesses should confirm that existing directors have completed identity verification or understand when they will be required to do so, make verification part of the incorporation process, ensure newly appointed directors have obtained their Companies House personal code, and consider the interaction between Companies House registrations, HMRC registrations and payroll setup. Businesses can also seek support through payroll advisory services when managing payroll compliance obligations.
Why should director identity verification be treated as a priority?
Director identity verification is one of the most significant changes to UK company administration in recent years. While the process itself is relatively simple, overlooking it can create wider compliance issues, particularly where payroll administration, PAYE registrations and interactions with HMRC are involved.
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What is the new Companies House identity verification requirement?
What is the new Companies House identity verification requirement?
