Date posted: 3rd Sep 2025
Starting 6 April 2025, directors of close companies across the UK must provide significantly more detail on dividend income within their Self‑Assessment tax returns.
These updates from HM Revenue & Customs (HMRC) will apply to hundreds of thousands of company directors.
What’s Changing?
Current Approach (Tax Year 2024/25 and Earlier)
Directors are currently only required to report the total amount of dividend income received—regardless of source e.g. their own limited company or plc dividends.
There’s no need to distinguish dividends paid by their own company from those received via investments or other shareholdings.
New Rules (From Tax Year 2025/26 Onwards)
From the 2025/26 Self‑Assessment filing, directors must separately report on their tax return:
- Dividends paid by their own close company
- Dividends from external investments or shareholdings
- The name of the company and the company registration number.
- The percentage shareholding in the company during the year and if the percentage changed, the highest percentage in the year.
Who Is Affected?
- Directors of close companies, defined under UK tax law as companies controlled by a small number of individuals (e.g., directors or family members).
Why the Change?
HMRC is introducing these enhanced reporting requirements to improve transparency and ensure accurate tracking of dividend income and tax liabilities. By separating intra-company dividends from external sources, HMRC aims to refine compliance and enforcement.
What Do Directors Need to Do?
Prepare Ahead:
- Review dividend payment records from your own company as well as any other shareholdings.
- Update internal record-keeping to clearly distinguish dividend sources.
On the Self‑Assessment Form:
- The 2025/26 tax return will feature separate fields for dividends from your own company versus external dividends.
- Make sure data is segmented correctly by source.
Keep Supporting Documents:
Maintain clear documentation of dividend payments, company records, and breakdowns to support your reporting.
Key Takeaways
- Action Required Now: Begin preparing your dividend income records ahead of the new reporting year.
- Ensure your personal record keeping clearly differentiates between company‑paid and external dividends.
- Check guidance from HMRC.
Of course, as a client of Clive Owen LLP, we will take care of this for you. If you are completing your own tax return, either online or on paper, you may wish to seek some professional guidance to avoid HMRC enquiries.
As ever, we are here to help.
