Company directors are set to face significantly expanded reporting obligations under new self-assessment requirements applying from the 2025/26 tax year onwards, and the changes are already creating uncertainty for taxpayers and advisers alike.
HMRC’s intention is clear: to improve transparency around close companies, dividend income and ownership structures. However, many directors may find the practical application far less straightforward.
Under the revised requirements, directors of close companies will need to provide additional information within their tax returns, including details of the companies they are involved with, the value of dividends received and the extent of their shareholdings. While some of this information could previously be disclosed voluntarily, it is now becoming mandatory.
For many owner-managed businesses, these changes may initially appear relatively minor. They represent another step in HMRC’s wider drive towards greater digital reporting, increased data matching and closer scrutiny of personal and corporate tax affairs. Directors who have historically relied on year-end information gathering may now need to rethink how records are maintained throughout the year to ensure the correct data is available when returns are prepared.
Greater transparency, greater complexity
The new reporting requirements are particularly focused on directors of close companies. Broadly speaking, a close company is one controlled by five or fewer shareholders or by directors. This means the rules will affect a substantial proportion of UK family-owned and owner-managed businesses.
The additional disclosures are expected to include company registration numbers, percentages of shareholdings and dividend information linked to directorships. Although HMRC already receives much of this information through Companies House filings and corporation tax submissions, the new requirements appear designed to improve cross-checking between personal and corporate records.
In principle, increased transparency is understandable. HMRC continues to invest heavily in compliance technology and data analytics, and aligning information across different reporting systems is a logical objective. However, ICAEW has raised concerns that the rules may create confusion for taxpayers, particularly where ownership structures are more complex or where directors are uncertain about the precise information required.
There are also practical concerns around timing. Many directors do not finalise dividend figures or shareholding changes until after their company accounts have been completed. In businesses where ownership structures evolve during the year, determining exactly what must be disclosed and in what format may not always be straightforward.
The changes also arrive against the backdrop of wider tax administration reforms. Making Tax Digital for income tax is now underway for qualifying taxpayers, and HMRC continues to increase expectations around digital record keeping and real-time accuracy. Directors may therefore find themselves under growing pressure not only to disclose more information, but to ensure records are maintained in a way that can support faster and more detailed reporting obligations.
Why action is needed now
Although these changes were first announced ahead of the 2025/26 tax year, they are now directly relevant to the self-assessment returns currently being prepared. Directors and business owners should therefore ensure they fully understand what information will need to be disclosed and whether existing records provide the level of detail now expected by HMRC.
For some companies, this may simply involve reviewing dividend schedules, shareholder records and company information before returns are submitted. For others, particularly businesses with multiple shareholders, group structures or changes in ownership during the year, the additional reporting obligations may require more detailed analysis to ensure disclosures are accurate and complete.
The changes also reinforce the importance of joined-up tax planning between companies and their directors. Historically, personal and corporate tax compliance have often been viewed separately. Increasingly, HMRC is taking a more connected approach, comparing information across different filings and identifying inconsistencies more quickly through enhanced digital systems.
As further HMRC guidance emerges, practical interpretation of the rules will continue to develop. What is already clear, however, is that directors will be expected to provide more detailed information within their tax returns, and greater scrutiny is likely to follow where records do not align across personal and corporate filings.
At Hillier Hopkins, we are helping business owners and directors navigate the changing compliance landscape and understand what these new requirements mean in practice. If you would like to discuss how the rules could affect you or your business, please get in touch with your usual Hillier Hopkins contact or speak to our tax team.
