New reporting requirements for close company dividends – what’s changing from 2025/26

Following a previous consultation on extending the disclosure requirements of owner-managed businesses in self-assessment tax returns, Section 8 TMA 1970 was revised to give powers to the HMRC Commissioners to require additional information on taxpayers. 

Using these powers, The Income Tax (Additional Information to be included in Returns) Regulations 2025 were published, detailing new requirements from 6 April 2025. These apply to close companies where the taxpayer is a director and a shareholder in the company. HMRC explains its rationale behind the changes in the explanatory memorandum to the regulations. 

From 2025/26 onwards, taxpayers must state whether they are a director of a company during the tax year and whether that company is a close company. A close company is a company controlled by its directors or five or fewer participators. 

Where the taxpayer is a director in a close company, the regulations require the following information to be disclosed: 

In cases where the percentage of share capital has changed during the relevant year, the figure to be included is the highest percentage held. 

Whilst these requirements will not affect 2024/25 tax returns currently being worked on by tax agents, it would be advisable to maintain a note of the required information for any dividends declared on file, so that this can be referred to when preparing tax returns for the 2025/26 tax year and future tax years. 

Wider considerations for close companies 

These new requirements do not change the need for dividends to be correctly declared and for the company to have sufficient distributable reserves to make the dividend payment. Under no circumstances should dividends be backdated to an earlier date, even if that would result in a more desirable tax outcome. 

We explored the broader tax issues on director’s loan accounts and dividends in our overdrawn director’s loan accounts article and Tax issues regarding loans and dividends webinar.  

Should you have any queries on the tax issues on loans and dividends or the new reporting requirements, please get in touch with the ICAS Technical Helpdesk. 

Let us know your views 

We welcome your views, which help inform our work on consultations or other tax-related matters. We respondedto many tax calls for evidence and consultations, as well as producing  tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members. 

Please get in touch to share your insights and feedback.