Business rules are shifting once again — and the changes are wide-ranging. From mandatory ID checks for directors and PSCs to the phased rollout of Making Tax Digital, employers and business owners face new duties that will affect daily operations. Add to this the government’s Small Business Plan, stricter late payment rules, rising minimum wage forecasts, and challenger banks reshaping the finance landscape, and the message is clear: compliance and preparation are no longer optional, they’re essential.

In this update, we break down the key reforms, explain what they mean in practice, and set out the steps you can take now to stay ahead of deadlines and avoid unnecessary costs.

New Legal Requirement: Directors and PSCs Must Verify Their Identity from November 2025

From 18 November 2025, company directors and People with Significant Control (PSCs) will face a new legal obligation: identity verification. This forms part of the Economic Crime and Corporate Transparency Act 2023, aimed at strengthening the accuracy of the Companies House register and reducing fraud.

What’s changing

• New appointments: Anyone becoming a director or PSC on or after 18 November must verify their identity within 14 days.
• Existing directors: Verification will need to be confirmed when filing the next company confirmation statement, with a 12-month transition window.
• Existing PSCs: Each PSC will have a set 12-month period to complete the process. For PSCs who are not directors, the deadline will run from the first day of their birth month in 2026.

Failure to comply will be an offence—meaning directors cannot legally act until verification is complete.

Why this matters

The aim is simple: prevent the use of false identities in company structures and improve trust in the register. For most people, this will be a quick, one-off check taking just a few minutes through GOV.UK One Login. Businesses can also complete the process via an Authorised Corporate Service Provider (ACSP).

What to do now

• Stay alert: Companies House will contact firms using the registered email address, with details of each individual’s verification deadline.
• Plan for transition: Factor the new requirements into director onboarding processes and ensure confirmation statement filings allow for the extra step.
• Support your team: Directors and PSCs may need guidance to complete the process smoothly—consider circulating instructions early.

Government Unveils Small Business Plan

Launched in August, the Government’s Small Business Plan sets out measures to reduce red tape, widen access to finance, and tackle late payments—issues that directly affect growth and cashflow.

Tackling late payments

The UK is set to adopt the strictest late payment rules in the G7, including:

• Large businesses legally required to pay within 60 days, moving to 45 over time.
• Mandatory interest on overdue payments.
• Stronger powers for the Small Business Commissioner, including fines and spot checks.
• Audit committees obliged to review payment practices.

If implemented effectively, these reforms could reduce time spent chasing invoices and ease cashflow pressures for smaller suppliers.

Widening access to finance

• 69,000 new Start-Up Loans, paired with mentoring.
• A £3 billion boost to the British Business Bank.
• £340 million in regional equity funding.
• A new Code of Conduct on personal guarantees for government-backed loans.

These changes should give entrepreneurs and growing businesses more routes to affordable funding.

Cutting red tape

The plan promises a 25% cut in regulatory admin costs and reforms to tax and customs processes. Time saved here could free up more resources for business growth.

Making Tax Digital for Income Tax – Are You Ready?

The government is pressing ahead with Making Tax Digital (MTD) for Income Tax. Around 2.9 million individuals—primarily sole traders and landlords—will be brought into the regime between April 2026 and April 2028.

Key changes

• Digital records: Paper ledgers will no longer be acceptable.
• Quarterly submissions: Updates to HMRC must be filed using compatible software.
• Final declaration: An end-of-year return replaces the traditional Self Assessment.

Who’s affected and when

• Income over £50,000: from 6 April 2026 (864,000 people).
• £30,000–£50,000: from 6 April 2027 (1,077,000 people).
• £20,000–£30,000: from 6 April 2028 (975,000 people).

Next steps

• Check your total gross income from self-employment and property.
• Move away from paper records now to avoid a last-minute rush.
• Explore cloud accounting tools that simplify quarterly updates.

Minimum Wage: Work Begins on 2026 Rates

The Low Pay Commission (LPC) has been asked to set National Minimum Wage and National Living Wage rates for April 2026. While final figures will be published later in 2025, the government has reaffirmed its commitment to a National Living Wage set at two-thirds of median earnings.

Based on current forecasts, this points to a £12.71 hourly rate in April 2026—a 4.1% rise from today’s level. The LPC will also review the gap between the adult rate and the 18–20 age bracket, with a view to narrowing it.

What to do now:

• Model higher payroll costs into your 2026 budgets.
• Consider knock-on adjustments to preserve pay structures.
• Remember employer NICs and pension contributions.

Business Banking: Challenger Banks Gain Ground

The latest Business Banking Service Quality survey highlights a clear shift: challenger banks such as Monzo, Mettle, and Starling top the rankings, while some traditional high-street names lag behind.

Digital convenience and faster onboarding remain big draws, but relationship-driven providers like Handelsbanken still score highly, suggesting personal service remains valuable alongside digital tools.

For SMEs, this raises questions: Could switching bank reduce admin, improve access to finance, or cut costs? Or would a relationship-led model deliver greater long-term support?

Final thoughts

Identity verification rules, small business reforms, tax digitalisation, rising wage costs, and a shifting banking market all share the same theme: more compliance requirements, but also new opportunities to streamline and strengthen operations.

The best step you can take is to prepare early—whether that means reviewing your payroll budgets, testing new accounting software, or planning ahead for director verification.

If you’d like support with any of these changes—whether it’s MTD readiness, cashflow planning, or director onboarding—we’re here to help make the process straightforward.

Categories: Positive Accountant