From 6 April 2025, HM Revenue & Customs (HMRC) is overhauling how dividend income must be reported. The new approach demands more transparency and much closer attention to detail.
At present, your dividend income is reported as a single lump sum, whether it is from your own company or elsewhere.
From the 2025/26 tax year, that all changes. You will need to break down dividend income from each company in which you hold shares, especially your own.
The additional details required will include:
This must be separated from any other dividend income on your Self-Assessment return.
A close company is typically a UK-based limited company controlled by five or fewer shareholders or any number of shareholder-directors.
That includes most owner-managed companies and family-run businesses, making this a widespread change.
This new approach helps HMRC track how much dividend income is being paid out by owner-managed companies – an area where visibility has previously been low.
It is part of a wider push to narrow the tax gap and tighten oversight of business structures commonly used by SMEs.
Self-Assessment forms will now ask whether you were a director of a close company during the tax year.
This will be mandatory, with no option to skip the question.
So, if you are a director-shareholder, make sure you’re keeping records of:
It is especially important if you have altered your ownership structure during the year.
The Government has confirmed it is scrapping plans to require employers to report actual employee hours via payroll from April 2026.
This measure was abandoned due to cost, but it is advisable to be prepared as HMRC is likely going to find new ways to collect detailed data.
Directors of close companies should begin preparations for the new dividend rules now. That means:
Need help with these upcoming changes? Our expert team is here to support you with practical advice and guidance. Speak to us today.
