New tax reporting obligations are on the way, and they will affect hundreds of thousands of directors across the UK.
If you are a director of a close company or owner-managed business, you will soon have to provide more detailed information about the dividends you receive through your Self-Assessment tax return.
This change takes effect from the 2025/26 tax year and is part of HM Revenue & Customs’ (HMRC’s)efforts to tighten transparency on shareholder income.
Right now, you can simply report the total amount of dividend income you receive, whether it is from your company or another source.
From April 2025, that won’t be enough.
You will be expected to submit the following for each company that paid you dividends:
This level of detail must be submitted separately from other dividend income.
HMRC wants clearer insight into where dividend income is coming from, especially when paid by the taxpayer’s own company.
This reform is part of the Government’s broader strategy to close the tax gap and ensure that profits taken as dividends are being declared accurately and transparently.
A further requirement will ask whether you were a director of a close company during the relevant tax year.
This question must be answered and cannot be skipped.
To meet the new rules, you will need to maintain precise records throughout the year, including:
This will be particularly important for directors whose ownership or share structure changes mid-year.
Originally, the Government planned to introduce mandatory payroll reporting of actual hours worked by employees.
However, this initiative has now been abandoned. The administrative burden and costs – estimated at around £60 million – led to its cancellation.
With less than a year until the new rules apply, it is time to act. We recommend:
These changes mark a step up in HMRC’s focus on owner-managed companies.
If you are unsure how to comply or need help updating your reporting, speak with our team today.
