As of 6 April 2025, directors of owner-managed businesses need to meet a new reporting obligation as part of their Self-Assessment tax returns.
The revised rules will affect an estimated 900,000 individuals across the UK.
Under the updated requirements, directors must provide detailed information about dividend income received from their own companies.
This includes the company name, registration number, the highest percentage of shares held during the tax year, and the exact amount of dividend income received.
These figures must be reported separately from any other dividends.
Previously, directors only needed to declare the total amount of dividend income without distinguishing the source.
HM Revenue & Customs (HMRC) had limited visibility over how much originated from a director’s own business as opposed to external investments.
The change gives HMRC greater insight into how owner-directors are remunerated and will support more focused compliance activity.
Plans to report employee hours scrapped
A proposal to mandate the reporting of actual employee working hours through payroll has now been withdrawn.
The plan, which had already been deferred to April 2026, was ultimately dropped due to the high cost of implementation (estimated at nearly £60 million).
New mandatory Self-Assessment question for company directors
From the 2025/26 tax year, individuals completing a Self-Assessment return will be required to answer a compulsory question confirming whether they are a director of a close company.
Accurate record-keeping will be required, especially where shareholdings fluctuate throughout the year or involve multiple share classes.
These developments reflect a broader trend towards increased transparency and more granular personal tax reporting.
If you are a business owner and think you might be affected by these changes, contact us for expert advice.
