After the 2025–2026 tax year starts on 6th April, directors of close companies will have to report the dividend income they receive from their company separately.
In broad terms, a close company is an owner-managed company controlled by its directors (or five or fewer ‘participators’). The reporting change is expected to affect around 900,000 directors who previously only needed to report their total dividend income.
HMRC is implementing this change because the tax agency can’t tell from total figures which dividends came from the director’s company and which came from other sources.
Enforcing separate dividend disclosures will ensure that HMRC can identify an owner-manager’s remuneration package accurately to confirm they are complying with tax rules.
Here’s how dividend income reporting requirements will change for close company directors.
What do close company directors have to disclose?
From April 2025, answering the tax return question about whether you are the director of a close company will no longer be voluntary – this disclosure will become mandatory.
For each tax year, directors of close companies will now be required to disclose the:
- Name and registration number of the company
- Highest percentage shareholding in the company
- Dividend income received from the company
However, despite a delayed implementation planned for April 2026, employers will no longer need to report employee hours data (the actual hours each employee worked).
This would have made the real-time reporting process too complicated, but fortunately for businesses, this burden was shelved due to a high forecast cost of nearly £60 million.
More information on which companies are categorised as close companies and tax obligations for close company directors is available in HMRC’s Company Taxation Manual on the government website.
Get help with accounting and secretarial services
Making mandatory dividend disclosures accurately and on time is essential if you want to keep up with regulations – otherwise, you could face a tax compliance investigation by HMRC.
This means keeping thorough company accounts and declaring all dividend income as requested.
If you have any concerns about close company dividend disclosures, or you’re looking for accounting services or company secretarial services to manage bookkeeping and tax obligations on your behalf, you can contact the tax consultants at gbac.
Our team of accountants in Barnsley will be happy to help if you call us on 01226 298 298. You can also email enquiries to info@gbac.co.uk and we will get back to you as soon as we can.