Close company directors face new HMRC detail requirements in 2026

If you run your business through a limited company, chances are HMRC is about to take a closer look at how you pay yourself.

From the 2025/26 tax year onwards, directors of close companies will need to include significantly more detail on their Self-Assessment tax returns, particularly around shareholdings and dividend income. This is not a tweak at the margins; it’s a deliberate push by HMRC to join the dots between ownership, control and profit extraction.

What is a “close company”?

In tax terms, a close company is broadly one that’s:

• Controlled by five or fewer shareholders, or
• Controlled by its directors

In practice, this definition incorporates most owner‑managed and family‑run companies, from one‑person consultancies to husband‑and‑wife trading companies.

If you’re a director and a shareholder in your own company, you should assume these rules apply unless told otherwise.

What info did directors previously submit?

Until now, directors simply reported their total dividend income on their tax return. Dividends from your own company, dividends from quoted shares, dividends from funds, etc., were all bundled together in one number.

HMRC could see what you received, but not where it came from. For a tax authority increasingly focused on data and risk‑profiling, that opacity needed addressing.

What do directors need to report in the 2025/26 tax year?

From the 2025/26 Self-Assessment return (filed from April 2026 onwards), directors of close companies must disclose additional, company‑specific information.

For each close company you’re involved with, you’ll need to report:

• The company name
• The Companies House registration number
• Dividends received from that company during the tax year (reported separately from other dividends)
• The highest percentage shareholding you held at any point in the year, even if it changed mid‑year, or you no longer hold the shares by year‑end
• Whether the taxpayer was a director of a close company during the year

Even if no dividend was paid, the company still needs to be reported, with a dividend figure of £0.

Why is HMRC is doing this?

HMRC wants more visibility over how owner-managers extract profits from their businesses. These changes should also help them close tax gaps and reduce errors and under-reporting.

By linking dividend income directly to specific companies, and overlaying that with ownership percentages, HMRC gains far clearer visibility over how owner‑managers structure their remuneration.

It’s also part of a broader shift towards “nudge‑based” compliance, where more detailed returns reduce the need for later enquiries.

The cost of missing information

These disclosures don’t affect the amount of tax you pay, but HMRC still cares whether the boxes are filled in.

From 2025/26 onwards, HMRC can charge a £60 fixed penalty per missing item where the required information is omitted from a return

If you miss the company name and the shareholding percentage, that’s potentially two penalties (£120), even if the tax calculation itself is correct.

Where directors will find problems

Our team have found these recurrent issues with our clients:

• Changing shareholdings: If shares were transferred, issued or bought back during the year, you must report the maximum percentage held at any time. Neither an average nor a year-end position will be accepted

• Multiple share classes: Calculating a “percentage shareholding” is difficult in cases where different shares carry different rights. HMRC guidance is still evolving here, so careful record‑keeping is key.

• Unpaid directors: Even if you take no salary and no dividends, you may still need to complete the relevant sections simply because the close‑company disclosures now sit on the employment pages of the return.

When do these changes come into effect?

These changes apply from 6 April 2025, meaning:

• First affected Self-Assessment Return: 2025/26
• Filing deadline: 31 January 2027

What you should do now

1. Make sure your dividend paperwork is complete and consistent.

2. Keep a clear record of shareholdings throughout the year, not just at 5 April.

3. Flag early if your company has unusual share rights or mid-year changes. 

And, of course, get advice before assuming last year’s approach still works this year.

Summary of the required new disclosures

In summary

For most directors, the extra reporting will be manageable with good records and forward planning. But it is new, it is mandatory, and it does come with penalties if ignored.

If you’re unsure how these changes affect you, or want us to handle the detail while you carry on with running the business, Shorts' Accountancy Services team are here to help.