HMRC Introduces Stricter Dividend Reporting For Directors

Tax Queen

Tax Expert @ Pie

3 min read

From 6 April 2025, new requirements came into effect for additional information to be included in certain Self Assessment tax returns. The changes were introduced by The Income Tax (Additional Information to be included in Returns) Regulations 2025 (SI 2025/84).

The first Self Assessment returns affected are for the 2025/26 tax year, with online returns generally due by 31 January 2027.

HMRC has now published updated guidance explaining how directors should provide the additional information. The changes do not alter the underlying tax treatment of dividends or create a new tax liability. Instead, they require more detailed information to be reported through Self Assessment.

Key Changes to Dividend Reporting Requirements

Previously, directors and other taxpayers reported dividend income through their Self Assessment tax return without the same level of detail being required about dividends received from a close company.

From the 2025/26 tax year, relevant directors must provide additional information about their directorships and, where applicable, dividends received from close companies.

For a director of a close company, the additional information includes the company's name and registered number, the amount of dividend income received from that company and the highest percentage of its share capital held during the tax year.

The rules give HMRC greater visibility of how directors receive income from companies they are connected with and make it easier to cross-check information reported through Self Assessment with company records.

For general guidance on completing a return, see our self-assessment tax returns guide.

Detailed Disclosure for Directors of Close Companies

Under the new Self Assessment requirements, relevant directors must provide information about each directorship.

HMRC has clarified that where a taxpayer is already required to submit a Self Assessment tax return and was a director of a UK company during the tax year, additional information generally needs to be provided through the SA102 employment pages. This applies to each relevant directorship, including where there was no remuneration or shareholding for that tax year.

Where the company is a close company, the director must also provide:

The name of the close company.
The company's registered number.
The amount of dividend income received from that close company during the tax year.
The highest percentage of the company's share capital held during the tax year.

This means directors should not assume that only dividend payments need to be included. The new Self Assessment requirements also collect information about the directorship itself.

Understanding Share Capital Reporting

One of the more detailed requirements is reporting the highest percentage of share capital held during the tax year.

The legislation requires the highest percentage of the close company's share capital held by the individual during the relevant year to be reported.

If your shareholding changes during the year, you should keep records showing those changes so you can identify the highest percentage held.

Keeping your share register, records of share transfers and dividend paperwork up to date can make completing your Self Assessment return much easier.

If you have a more complicated share structure, it is particularly important to check the latest HMRC guidance and the relevant Self Assessment notes when completing the return.

Impact On Unincorporated Businesses

The changes are not limited to directors and dividend reporting.

From 6 April 2025, relevant sole traders and partnership businesses must provide information about the start and end dates of relevant business activities through their tax returns.

The regulations were introduced specifically to allow HMRC to collect business start and end dates through personal, trustee and partnership returns.

Accurate dates can help HMRC establish when a business began or ceased trading and administer tax rules and reliefs correctly.

For example, business cessation information can be relevant when considering whether the conditions for reliefs such as Business Asset Disposal Relief have been met.

If your business has started or stopped during the tax year, keeping clear records of the relevant dates can therefore help you complete your Self Assessment return accurately.

Penalties for Failure to Comply

The new information requirements are supported by penalty provisions introduced through the Finance Act 2024.

A failure to comply with a relevant additional-information requirement can result in a penalty of up to £60. It is therefore not accurate to describe the rules as an automatic £60 charge for every individual piece of missing information.

HMRC has also confirmed that it will take a considered, case-by-case approach to compliance. It will consider the relevant facts and circumstances, including the reasonable efforts taxpayers have made to meet their obligations based on the information and guidance available at the time.

The practical takeaway is to make sure the additional information is complete and accurate when you submit your Self Assessment tax return, particularly if you are a director of a close company.

What Directors Should Check Before Filing

If you are a director of a close company and need to complete a Self Assessment tax return, make sure you have the information required for the new reporting rules.

Check that you have:

The company's legal name and registered number.
Details of each relevant directorship.
The amount of dividend income received from each relevant close company.
Records showing your shareholding during the year.
The highest percentage of share capital you held during the year.
Details of any other dividend income that needs to be reported on your Self Assessment return.

If you are self-employed or involved in a partnership, also check whether you need to provide business start or cessation dates.

These changes do not change the underlying tax treatment of dividends. They change the level of information HMRC collects through Self Assessment.

Final Summary

HMRC's updated reporting requirements mean that Self Assessment now collects more detailed information from directors of close companies and relevant unincorporated businesses.

For the 2025/26 tax year onwards, relevant directors must provide information about their directorships, while directors of close companies must also report details including the company name and registration number, dividends received from the company and the highest percentage of share capital held during the year.

Relevant sole traders and partnership businesses must also provide business start and cessation information where applicable.

HMRC has now published updated guidance for completing Self Assessment returns, so directors and business owners should use the latest information when preparing their returns.

Keeping accurate dividend, shareholding and business records can make Self Assessment easier and help ensure the additional information is reported correctly.

For those managing their Self Assessment requirements, the Pie Tax app can help keep your tax information organised and make staying on top of your tax obligations simpler.

Get started with Pie Tax for free or see how it works for yourself.