UK limited companies face ‘unavoidable’ but ‘aggressive’ increase in Companies House fees

Limited companies face an “aggressive” increase in fees from Companies House, or their accountant -- or both, due to two tranches of changes by the government agency.  

The first tranche concerns security, imposing new rules on company directors concerning email address, registered office, and a new lawful intent statement. 

Tranche one applies soon - from March 4th 2024. 

'Aggressive'

The second tranche of Companies House changes concerns costs. 

For limited companies, the changes contains more than 25 price hikes related to incorporation, filing or making changes, and registration fees. 

Tranche two applies from May 1st 2024. 

Contractor accounting firm Chart Accountancy describes the Companies House price increases as “aggressive”. 

And Helen Christopher, an independent chartered accountant, called the increases “significant.”  

Meanwhile at Dolan Accountancy, head of compliance Zeeshan Anwar characterised the fee increases as burdensome. 

'Companies House Administrative Restoration fee will rise from £100 currently, to £468'

The cost of submitting an annual Confirmation Statement, for example, will increase by almost 300%, from £13 to £34. 

Changing a company name will increase by 150%, from £8 to £20, further suggesting small tasks won’t escape big increases. 

The most expensive task (overall) will be ‘Administrative Restoration’ -- the process of getting Companies House to restore a dissolved company. 

From May 1st 2024, Administrative Restoration will cost £468, versus £100 currently, representing a price increase of 368%. 

'Another significant blow for limited companies'

On its website, Companies House says it reviews its fees every year to “make sure they’re set at the right level.” 

“These price increases feel like another significant blow for contractors operating their limited companies,” says Ms Christopher who, ironically, was planning to open her new accountancy firm as an ‘LTD.’ 

Christopher added: “I think it is hard to conceive how anyone can agree that these increases are at the ‘right level.’”  

'Not understandable at this level'

Teodora Dimitrova, the owner of Chart Accountancy also took issue with Companies House’s online claim. 

“An increase to the fees [which have stayed the same since 2016] is understandable. But not at this level,” she says. 

“For the Confirmation Statement alone, the fee will increase from £13 to £34. 

“That’s for a purely statistical filing obligation which is completed online and as per Companies House’s own message, it takes less than five minutes to complete!” 

'Small business taxpayers to hand Companies House £100-million plus'

Dimitrova totted up that as the Confirmation Statement is a “permanent annual cost for every LTD registered in the UK,” Companies House can expect quite the windfall. 

“Considering in the UK we have over 4.9million companies and each one will have to pay the annual £21 increase [to file form CS01],” she said, “that’s an additional £100m-plus in revenue from small businesses taxpayers.”  

Online, Companies House says it does “not make a profit on our fees” but adds that its fees “must cover the cost of the services we deliver.”  

'No option but to start passing these costs on'

Unfortunately for limited company directors, accountants are signalling that they’re going to have to cover their costs too. 

“Customer-focused accountants that have been absorbing Companies House fees for years will now have no option but to start passing these [higher] costs [from May 1st] onto their clients, otherwise the cost burden will become too much,” warns Dolan Accountancy’s Mr Anwar.  

“An accountancy practice that has a few hundred clients cannot now absorb £10,000-plus in yearly Confirmation Statement fees”. 

Anwar was referring to the second tranche of the Companies House changes – the 25-plus price hikes from May 1st. 

'Registered email address'

But accountants’ workload will likely increase too -- by them having to ensure that their limited company clientele is compliant with the first tranche of changes, effective from March 4th. 

Under these security reforms at Companies House (CH), all companies will be required to provide a "registered email address" for CH correspondence.  

The email address won’t be visible on the public register, and existing registrants can submit their registered email address when they file their next Confirmation Statement. 

'Appropriate address'

Also from March 4th 2024, all companies must file a new “appropriate address” as their registered office, but PO Box addresses will no longer be accepted. 

The third, showpiece of the security reforms is that directors must fill in a new form to state that they intend to “act in a lawful way.” 

Contractor accountant Graham Jenner of Jenner & Co writes about this so-called ‘Statement of Lawful Purpose’ exclusively today on ContractorUK -- and not without a few key reservations. 

'Confusing or misleading'

But in addition to these three security reforms, the March 4th package includes five additional changes. 

The five are; greater powers for CH officials to query information and request supporting evidence, stronger checks on company names, the ability to annotate the register if information appears “confusing or misleading,” and using data matching to “identify and remove inaccurate information.”  

Chartered accountant Ms Christopher believes the jury is out as to whether all these new security layers will equate to greater hassle for accountants, and therefore greater fees for PSCs (Personal Service Companies). 

Ominously for directors’ bottom lines, the one aspect of the security reforms which cloud accountant FreeAgent has warned could indeed result in higher accountancy bills – director ID verification – is yet to be unveiled by Companies House. 

'Will need to be paid for'

“In terms of the [security] changes…announced [for introduction from March 4th], there will certainly be more information required to be submitted whether on company formation or at CS01 submission stage,” cautions Christopher, who trained with PwC. 

“The key to how much of a faff this will be, will be determined by how quickly the company secretarial software providers can update their systems.  

“The bigger challenges are still yet to come….when the new identification process for directors comes into play. 

“We believe later in the year…this will become part of the process for new incorporations. [But] there will be additional administrative work needed for existing directors and shareholders. And that will need to be paid for.”  

'The burden is to be borne by the UK's smallest businesses'

But it’s not as if contractor accountancy firms feel particularly flush, as their financial resources - and buffers - sound scarce.   

“The accountants for small businesses are already facing the increase in the National Minimum Wage, increased costs, and rising software licence [fees],” warns Chart’s Ms Dimitrova. 

“But Companies House have just gone ahead with a rather aggressive increase to their fees and at short notice, with just three months to go.

"This [increase] is for all businesses with their accountants to factor-in, but either way, it will mean the burden is to be borne by the UK’s smallest businesses.”  

Dimitrova added that Companies House should publish both a “breakdown” of their internal costs to justify the “significant” fee increases and an outline of the “additional services they would deliver,” from its “unfair” revenue-grab. 

'Accountancy fees are going to have to go up to reflect these unavoidable Companies House changes'

A contractor accountant who doubles as a financial coach, Ms Christopher said: “[These May 1st changes by Companies House contain] significant price hikes that no limited company is going to be able to avoid.  

“For smaller limited companies and contractors, these price increases are not easy to swallow and consequently, I don't believe they can or will be swallowed by accountants -- fees are going to have to go up to reflect these changes.”