Major chanMajor changes are approaching in the way accountancy firms function. In 2026, new regulations will transform your compliance processes, client interactions, and daily operations. What’s upcoming? Anti-money laundering oversight is transferring to a new regulator. Transparency rules for companies are becoming more stringent. Digital tax filing is broadening. Financial reporting standards are being revised. Here’s the essential information you need.
1. FCA Takes Over AML Supervision
In October 2025, the government announced that the Financial Conduct Authority (FCA) will assume responsibility for anti-money laundering (AML) supervision starting in 2026. This transition replaces the current system, where approximately 26 different professional bodies independently oversee their members, leading to a fragmented AML compliance landscape.
Why is this happening? The professional bodies applied rules inconsistently—what one approved, another might reject. Standards varied significantly across the profession. After reviewing this scattered approach, the government decided it was ineffective.
By centralising oversight under the FCA, a unified rulebook will be established for all entities. This also facilitates improved collaboration between regulators and law enforcement in monitoring suspicious activities. The FCA, already known for stringent regulation and active enforcement in financial services, will extend those rigorous standards to the accountancy sector. Expect comprehensive checks, frequent audits, and higher standards than previously experienced.
Client Checks Are Becoming More Comprehensive
Client due diligence standards have been intensified. You are now required to conduct more comprehensive checks for additional clients, particularly those from countries identified by the Financial Action Task Force as high-risk.
Simple checkbox procedures are no longer deemed adequate. The FCA mandates proper risk assessments, supported by detailed documentation. For clients from high-risk regions, you must undertake thorough background investigations and provide unequivocal proof of their source of funds.
Your records should illustrate the evaluation process for each client’s risk level and the corresponding steps taken. When the FCA reviews your documentation, they will scrutinise for decisions that are logical and well-substantiated.
Client Money Rules Are Becoming More Stringent
If you manage client funds in pooled accounts, it is important to be aware that regulations are continuously evolving. You will need to enhance your transaction records, improve monitoring mechanisms to detect irregular activities, and conduct regular reviews of your account structures.
Carefully examine your existing controls. How quickly could you identify a suspicious transaction? Are your safeguards sufficient to prevent the misuse of funds? The FCA mandates systems that operate effectively in practical scenarios, rather than solely having policies that seem robust on paper.
More Trusts Require Registration
The requirements for trust registration have been broadened. Previously, only particular trusts were mandated to register with HMRC’s Trust Registration Service. Currently, all non-UK trusts holding UK property are obliged to register, irrespective of the date of acquisition.
This modification substantially affects estate planning and tax advisory firms. It is essential to perform comprehensive verifications for every trust managed and to ensure meticulous filing of all relevant documentation. While smaller trusts may be exempt, confirming eligibility necessitates a careful, case-by-case evaluation.
Company Formation Services Now Covered by AML Regulations
Do you offer off-the-shelf companies, assist clients with buying or selling businesses, or provide registered office services? These activities now fall under AML rules.
The aim is to prevent individuals from concealing illicit activities behind company structures. If you provide these services, you need to understand the new requirements and update your compliance procedures accordingly.
Crypto Clients Require Special Care
Handling cryptocurrency clients adds extra complexities. Crypto firms are under closer scrutiny, and it’s crucial to understand the unique risks of digital assets. Rigorous due diligence is essential, and you should be alert to warning signs specific to the crypto sector.
2. What Happens If You Don’t Comply
Non-compliance may result in substantial fines, service restrictions, or removal from the regulatory framework. While enforcement authority was previously distributed among various entities, the FCA now asserts more robust enforcement capabilities. Errors may lead to penalties, operational constraints, or expulsion from the system. This represents a more stringent level of enforcement than what was previously accessible to professional bodies. Furthermore, increased audits are anticipated as the FCA collects detailed data and requires comprehensive reports on clients, risk assessments, and any suspicious activities.
Companies House Gains New Authority
The Economic Crime and Corporate Transparency Act is updating the company registration process.
Everyone Must Confirm Their Identity
Effective 18 November 2025, company directors and individuals with significant control are mandated to confirm their identities. This obligation extends to existing directors, not solely new appointees.
This development presents a beneficial opportunity. Accountancy firms are eligible to be recognised as Authorised Corporate Service Providers. Upon registration, these firms can authenticate the identities of their clients. This process ensures client compliance, mitigates the risk of penalties, and enhances the firm’s reputation as a proactive problem-solver.
3. Making Tax Digital is Expanding
Digital tax reporting is continuously expanding into new domains. VAT has now transitioned to a fully digital process, necessitating all VAT-registered entities, regardless of their size, to maintain digital records and submit returns through HMRC-approved software.
Income Tax is undergoing a digital transformation in stages. Making Tax Digital (MTD) for Income Tax Self-Assessment will be introduced as follows:
- April 2026: Self-employed and landlords with income exceeding £50,000 are required to maintain digital records and submit quarterly updates.
- 2027: The threshold is reduced to £30,000.
- 2028: It decreases further to £20,000.
This phased implementation provides adequate time for clients to prepare; however, proactive engagement should commence immediately. Quarterly reporting significantly differs from annual submissions, and clients need sufficient time to adapt and become proficient with new software.
4. Financial Reporting Standards Are Changing
The Financial Reporting Council continues to update standards to align with international frameworks. FRED 88 introduces modifications to FRS 101 for 2025/26, incorporating IFRS 18 regarding financial statement presentation. These changes will take effect from 1 January 2027 for relevant periods.
5. Tax Allowances Are Being Cut
Recent budget measures impact capital allowances, which are important for your clients’ tax planning strategies. Starting from 1 April 2026 (for corporation tax) and 6 April 2026 (for income tax), the rate for writing-down allowances on plant and machinery decreases from 18% to 14% annually.
While this may seem technical, it affects your clients’ tax liabilities and investment timing. Some clients might consider purchasing equipment sooner rather than later to avoid the rate drop. It is recommended to review strategies now to identify those who might be affected.
Preparing Your Firm
Waiting until deadlines approach often leads to avoidable issues.
Review Your Policies
Review your AML policies and onboarding procedures to identify any gaps in compliance with FCA standards. Develop a comprehensive plan to rectify these deficiencies. Particular attention should be given to documentation, as the FCA mandates evidence that policies are actively implemented, rather than merely stored.
Train Your Team
Provide practical training for staff on identifying red flags and understanding when to escalate concerns. Generic compliance courses are inadequate. Utilise real scenarios pertinent to your clients to improve retention. Conduct regular refresher sessions, as compliance is an ongoing process rather than a one-time event.
Communicate with Your Clients
Inform clients early about upcoming changes. Avoid delaying MTD requirements or identity verification. Clear communication about timelines and client responsibilities benefits everyone.
Evaluate Your Technology
Assess whether your existing systems are capable of satisfying the new digital reporting requirements and enhanced due diligence procedures. If deficiencies are found, identify the necessary upgrades. Develop a plan for implementing these changes prior to the deadlines to prevent last-minute complications.
How The Infinity Group Can Help
Ongoing regulatory changes impose additional pressures on businesses that are already managing daily operations alongside their tax and reporting obligations. Staying abreast of new regulations, digital reporting requirements, and compliance updates can be formidable.
At The Infinity Group, we acknowledge these challenges. We support our clients through regulatory transitions by providing clear guidance and practical, bespoke solutions. Whether it pertains to Making Tax Digital, Self Assessment, continuous tax compliance, or adapting to new regulations, we are prepared to assist.
By managing the intricacies of regulation and compliance, we empower you to concentrate on expanding your business with confidence.