Labour stands by red tape pledge with Companies House decision – UKTN

Labour has stuck to its guns on its pledge to reduce the regulatory burden on businesses.

This week, it was announced that there would be a reversal of reforms to Companies House requirements. Under legislation brought in by the previous government, firms that were previously exempt from publishing detailed annual accounts on Companies House due to their size would have been required to use compliance software to meet the same reporting regulatory restrictions as larger businesses.

The upcoming shift initially prompted a backlash from SME advocates, including Startup Coalition executive director Dom Hallas, who said the move would be a “mistake”.

The rule change, which would have come into effect from April 2027, was delayed by the current government, with reports that Business Secretary Jonathan Reynolds decided it would have added unnecessary regulatory burdens to small businesses.

“[I am] very pleased that ministers have listened and dropped plans to change the reporting requirements for startups and small businesses that Companies House were planning,” commented Hallas.

“Thanks to all those that flagged and fair play to ministers (especially Jonathan Reynolds) for acting swiftly to deal with the problem.”

The decision is in line with the government’s repeated mission to fight back against red tape, a key commitment in Labour’s manifesto and a prominent feature of the recent Modern Industrial Strategy.

Among the government’s chief opponents of regulatory burdens has been Technology Secretary Peter Kyle, who recently warned that “fragmented rules” and “regulatory complexity” were holding back the UK’s fintech sector.

“The UK is a genuine world leader in both financial services and technology, and in the intersection between the two – fintech – but for far too many companies, the complex regulatory environment can be challenging to navigate,” Kyle said, addressing the audience at the City Week conference.

Kyle’s department has also been responsible for the launch of the Regulatory Innovation Office, tasked with working with existing regulators to update rules to speed up processes and ease burdens on businesses.

Meg Ogunsola, global director of entity management solutions at Vistra, emphasises the importance of the Economic Crime and Corporate Transparency Act (ECCTA) despite the policy reversal by government.

“This news highlights the complexity of drafting and introducing regulations, and the tricky balancing act of protecting and overburdening firms,” Ogunsola said.

“Despite this change, the ECCTA remains critical in the UK’s fight against fraud, and with mandatory ID verification coming into force this autumn, businesses must act now to ensure they are prepared.”

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