If you're a director of a close company, there are new Self Assessment reporting requirements you need to be aware of from the 2025/26 tax year. While these changes won't increase the amount of tax you pay, they do require additional information about your company, shareholding and dividend income to be reported to HMRC.
The new rules are designed to give HMRC greater visibility over owner-managed businesses and how directors extract income from them. For many company directors, this means additional disclosure requirements, greater scrutiny and new penalties for missing or incorrect information.
Whether you're a sole director-shareholder, part of a family business or involved in multiple companies, it's important to understand what's changing and what information HMRC will expect to see on your tax return.
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What Is a Close Company?
A close company is generally a UK limited company that's owned or controlled by a small number of people. This typically includes companies controlled by five or fewer participators (people with a share or interest in the company's capital or income), or by their directors.
In practice, most small, privately owned limited companies fall into this category, including owner-managed and family-run businesses.
Who Needs to Comply?
The new reporting requirements will affect you if you:
- Are a director of a close company; and
- Already complete a Self Assessment tax return.
Being a company director doesn't automatically mean you need to file a Self Assessment return. However, if you're already within the Self Assessment system, these additional disclosures are likely to apply to you.
Charity and CIC Exemption
For directors of registered charities and Community Interest Companies (CICs), there is some good news.
You won't need to complete the new close company sections on your Self Assessment tax return if you did not receive, or become entitled to receive employment income, dividend income or other distributions from the charity or CIC during the tax year.
This exemption is designed to reflect the fact that many charity trustees and CIC directors give their time voluntarily and don't receive any financial benefit from their role.
New Mandatory Disclosures for Directors
Starting with the 2025/26 tax year, your Self Assessment will ask for significantly more detail regarding your relationship with your company and the days of reporting a single, total figure for all of your dividends are over. Instead, HMRC wants to know what each close company has paid you and how that relates to your role and your shareholding in that business.
In the past, ticking the SA102 box to say you were a director of a close company was mostly optional. HMRC will now require a company‑by‑company breakdown for every close company where you were a director at any point in the tax year. For each one, you’ll be asked to provide:
Director Status
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Confirm whether you were a director of a close company
Company Details
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Full company name
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Company Registration Number (CRN)
Dividend Income
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The amount of dividend income received from each company, shown separately
Shareholdings
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Highest percentage of shares owned during the tax year
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Enter 0 if you owned no shares
These disclosures still apply even if:
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You took no salary
-
You received no benefits
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Your dividends fall within available allowances
Why Is HMRC Introducing These Changes?
To understand these changes, it helps to look at the bigger picture.
According to HMRC, there remains a significant gap between the amount of tax that should be collected and the amount actually received. Small businesses account for a substantial proportion of that tax gap.
By collecting more detailed information from directors of close companies, HMRC can:
- Link company profits more clearly to director income
- Compare dividend income against company records
- Identify inconsistencies between personal and company tax filings
- Target enquiries more effectively where concerns arise
The objective isn't to change how directors are taxed. It's to give HMRC greater visibility over how money moves between companies and their owners.
Penalties for Incorrect or Missing Information
It’s important to complete close company information carefully, as missing or inaccurate details may lead to a penalty from HMRC.
Examples could include:
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Missing company details
-
Incorrect registration numbers
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Failure to disclose dividend income
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Leaving mandatory fields blank
In more serious cases, where inaccurate information results in an incorrect tax liability, additional penalties may also apply under HMRC's wider inaccuracy rules.
What May Be Coming Next
Although the current changes focus on dividends and shareholdings, they're unlikely to be the end of the story.
HMRC has already consulted on expanding reporting requirements around transactions between close companies and their owners. Areas under consideration include:
- Cash withdrawals
- Directors’ loan account (DLA) movements
- Asset transfers and write-offs
Turning Admin into an Advantage
Handled properly, these new requirements can be more than a compliance exercise.
They provide an opportunity to improve how money moving between the business and its owners is recorded and understood.
When your records are in good order:
- Your finances are easier to manage
- Personal and company tax positions are easier to reconcile
- You gain greater visibility over how you extract value from the business
And that visibility can support better decisions around salary, dividends, directors' loans and long-term planning.
This blog was updated on: 29/09/2026
This blog was originally published on: 28/04/2026
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