From 6 April 2025, HMRC is introducing major changes to how dividend income must be reported on Self-Assessment tax returns. These updates – set out in The Income Tax (Pay As You Earn) (Amendment) Regulations 2025 (SI 2025/84) – will affect directors of close companies and those running unincorporated businesses.
At MCL Accountants, we’ve summarised what’s changing, what information you’ll need to provide, and how to prepare for the new rules.
What’s Changing for Dividend Reporting
Under the current rules, directors only need to declare the total amount of dividends received across all sources on their Self-Assessment return. There’s no requirement to split dividends from their own company versus other investments.
From the 2025/26 tax year onwards, this will change.
New information required for directors of close companies
If you’re a director of a close company, you’ll need to provide extra information on your tax return, including:
- Confirmation that you’re a director of a close company
- The name and registered number of that company
- The amount of dividends received from the company (declared separately)
- The highest percentage of share capital held in the year
This enhanced reporting is designed to give HMRC clearer visibility of dividends from owner-managed businesses.
The most complex part of the new rules is the requirement to disclose the highest percentage of share capital held during the year.
The Association of Taxation Technicians (ATT) has requested HMRC to issue guidance on how to calculate this for companies with different share classes, voting rights, or dividend entitlements.
Until more clarity is provided, directors should ensure:
- Share registers are up to date
- Changes in shareholding are properly documented
- Dividend records match the official company share register
This will make future reporting far smoother.
New Rules for Unincorporated Businesses
The 2025/26 changes don’t stop with dividends. Sole traders and partnerships must also provide start and end dates for their businesses on their Self-Assessment returns.
These new boxes will become mandatory and help HMRC track business activity more accurately.
It’s particularly important where:
- A hobby evolves into a business, or
- A business winds down gradually
Precise start and cessation dates can impact eligibility for reliefs like Business Asset Disposal Relief (BADR), so accurate record-keeping is key.
Penalties for Missing Information
These new rules apply from 6 April 2025, meaning you’ll first encounter them when filing your 2025/26 tax return in early 2027.
Failure to include the required information could lead to a £60 penalty per omission.
This penalty was introduced in the Finance Act 2024 to cover cases where HMRC requests additional data not directly tied to tax liability, but still legally required.
How to Prepare for the 2025/26 Changes
Directors and business owners should start preparing now to avoid last-minute issues.
Here’s how:
- Review your company records – ensure Companies House filings and share registers are accurate
- Track dividends separately – distinguish those from your own company versus external investments
- Record shareholdings – keep clear documentation of changes in ownership or share capital
- Consult your accountant early – planning ahead will make 2025/26 Self-Assessment smoother
Key Takeaways
- From April 2025, HMRC requires more detailed dividend disclosures for directors of close companies
- You’ll need to declare your company name, registration number, and shareholding percentage
- Unincorporated businesses must report start and cessation dates
- Failing to comply can trigger a £60 penalty per missing entry
Need Help Navigating the New Dividend Reporting Rules?
At MCL Accountants, we help company directors and business owners stay compliant with changing HMRC requirements. We can guide you through the new dividend reporting process, ensure your Self-Assessment is accurate, and help you maintain proper records for future reliefs.
Contact us today to discuss how the 2025/26 dividend reporting changes may affect your business.
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Ishan provides financial management, taxation and transactional advice to business entities of all sizes. His expert areas include statutory compliance, business taxation, personal tax & transactional processing and systems. Industry sectors include professional services, retail, hospitality and entertaining & media and advertising services.
