From the 2025/26 tax year onwards, HMRC is introducing new reporting requirements on Self Assessment tax returns for directors of close companies. These self assessment changes for directors will mean providing more information than in previous years, including details of dividend income and shareholdings.
For owner-managed and family-run businesses, this is an important change to be aware of now, especially as close company status will apply in many cases.
What has changed from 2025/26?
From the 2025/26 tax year onwards, directors of close companies must include more detailed information on their Self Assessment tax return.
This follows new HMRC regulations aimed at improving transparency around shareholdings and dividend income.
Previously, a director only needed to confirm in box 7 of the SA102 Employment pages that the company was a close company. From 2025/26 onwards, additional boxes must also be completed.
What directors now need to report
For each close company a director is involved with during the tax year, the following information must now be included on the SA102 pages:
- the company name
- the company registration number
- the amount of dividend income received from that company, even if this is £0
- the percentage of share capital owned in the company, even if this is 0%
This is a significant change. It means HMRC will now receive more detailed information about the link between company ownership and dividend income.
Why this matters in practice
One of the most important practical points is that HMRC has previously allowed directors not to complete an SA102 section where no salary or benefits in kind were received.
That position is likely to change.
Going forward, an SA102 may still need to be completed even where a director is unpaid, simply because the new close company disclosures still need to be included.
For owner-managed businesses, this could easily be missed if returns are prepared using old assumptions.
What is a close company?
Broadly, a close company is one that is:
- controlled by five or fewer participators, or
- controlled by its directors
A company may also be treated as a close company if more than 50% of the assets on a winding up would be distributed to five or fewer participators, or to participators who are also directors.
In practice, many owner-managed and family-run companies will fall within the rules.
What is a participator?
The term participator is wider than just shareholder.
It includes:
- a person who has, or is entitled to acquire, share capital or voting rights in the company
- a loan creditor of the company
- a person with a right to receive or participate in company distributions, or in amounts payable to loan creditors by way of premium on redemption
- a person entitled to acquire such a right
- a person entitled to secure that the income or assets of the company are applied, directly or indirectly, for their benefit
This matters because the definition of a close company is closely tied to who has control or a financial interest in the company.
Why HMRC is asking for more information
These self assessment changes for directors form part of a wider move towards greater data collection through the tax return system.
HMRC wants better visibility over:
- how directors extract value from their companies
- the relationship between shareholdings and dividend income
- compliance risk in owner-managed businesses
From HMRC’s perspective, these extra disclosures make it easier to identify inconsistencies and review whether income is being reported correctly.
Could there be more reporting to come?
Possibly.
HMRC is also consulting on additional reporting requirements for close companies themselves. If those proposals go ahead, close companies may have to give HMRC details of transactions involving participators.
That could include:
- cash withdrawals
- loans
- debts
- dividends
- other distributions
- transfers of assets to and from the company
Employment income reported through PAYE is unlikely to be included. However, the proposals are still wide-ranging.
HMRC may require the recipient, amount, and date of each transaction to be reported, whether the participator is an individual or a corporate shareholder. In some cases, details such as an individual shareholder’s address and National Insurance number may also be required.
What directors should do now
For directors of close companies, the immediate priority is making sure 2025/26 returns are prepared with these new reporting requirements in mind.
That includes checking:
- whether the company is a close company
- whether an SA102 section now needs to be completed
- whether dividend figures and shareholding details are being recorded clearly for each directorship
This is a compliance update rather than an optional extra. The information will need to be reported correctly, so it makes sense to prepare now rather than wait until tax return season is already underway.