New Self-Assessment Reporting Rules for Directors of Close Companies – What You Need to Know for 2025/26

From the 2025/26 tax year, new HMRC rules will apply to UK-based directors of close companies who are required to submit a Self-Assessment tax return.

A close company is broadly defined as a UK resident limited company that is controlled by five or fewer participators, or by any number of participators who are also directors.

These changes are part of a wider push for greater transparency in company ownership and dividend reporting and will affect many owner-managed and family-run businesses.

What’s changing?

Currently Self-Assessment tax returns include optional questions for directors about their directorship and whether the company is classed as a ‘close company’.

Starting from the April 2026, these questions will become mandatory.

Directors will be required to provide the following information:

• Confirmation of directorship

• Confirmation that the company is a close company

• The registered name and company number

• The total dividends received from the company during the tax year

• The percentage of shares held in the company, stating the highest percentage held if it changed throughout the year

This is a significant step up in terms of detail required, especially for those with changing shareholdings or multiple sources of dividend income.

What penalties will there be?

A specific penalty regime, separate from existing late filing and late payment penalties, will be introduced.

There will be a £60 penalty issued for each piece of missing or incorrect information.

This means that even small oversights could result in multiple penalties.

What does this mean for me?

Given the additional reporting requirements and the risk of penalties, proactive preparation will be essential to stay compliant. Detailed records of the following will need to be kept:

• Dividend payments from your company

• Any changes in your shareholding

• Accurate company details

  
  

How We Can Help?

At Shepherd Partnership, we understand the challenges that small business owners and directors face in keeping up with ever-evolving tax legislation. Our expert team is on hand to:

• Help identify if your company is a ‘close company’ and covered by these new rules

• Ensure all required information is correctly recorded and submitted

• Advise you on dividend strategies and shareholding changes

• Minimise the risk of penalties and non-compliance

Get Prepared for 2025/26

These new obligations may seem straightforward, but the consequences of getting it wrong can add up. We're here to make sure you're fully informed, fully compliant, and fully supported.

We are here to help. 

Please get in touch with any questions.

Article written by Heather Langtree