New Dividend Reporting Requirements

From the 2025/26 tax year directors of small companies will need to provide more detailed information about dividend payments on their Self-Assessment tax returns.

• You must report each company from which you received dividends, along with the company’s registration number.

• HMRC will require the exact amount of dividends received from each company.

• You will also need to declare your ownership share in each company.

Currently, most directors simply report total dividend income. The new rules mean HMRC will see exactly where your dividends come from, making accurate record-keeping more important than ever.

Changes to Dividend Tax Rates

From 6 April 2026, dividend tax rates will increase and the tax-free dividend allowance will remain at just £500. For reference, here’s a comparison of the current and new rates:

Tax Band	Old  Rate	New Rate from April 2026
Basic rate	8.75 %	10.75 %
Higher rate	33.75 %	35.75 %
Additional rate	39.35 %	39.35 %

What This Means for Small Business Owners

The combination of stricter reporting and higher tax rates highlights the need for careful planning:

• Detailed dividend reporting is now mandatory for directors of close companies.

• Keep clear records: Document each dividend payment with amounts, dates, and recipient shares.

• Plan dividend timing and size: Structuring payments carefully can help manage your overall tax bill.

• Review salary versus dividends: The balance between salary and dividends may need adjustment to minimise tax.

Please get in touch if you want help to understand how the latest HMRC dividend rules apply to you.  We can assess your current tax position, and put together a strategy develop a plan suited to your circumstances.