New shareholder dividend reporting requirements for many companies
This follows HMRC’s recent consultation, which resulted in extended powers to request additional information from certain taxpayers - including directors of family and owner-managed businesses.
What is a close company?
A close company, as defined by HMRC, is typically a limited company controlled by five or fewer participators, or by any number of participators who are also directors. In practice, this includes many owner-managed and family-run businesses across the UK.
What needs to be reported?
From the 2025/26 Self-Assessment return onwards, individuals who are shareholders in close companies must report the following details for each company in which they hold shares:
- The name and company registration number of the close company
- The amount of dividend income received from the close company during the relevant tax year
- The percentage of share capital held in the company
Why is this being introduced?
These changes are part of the Government’s broader strategy to reduce the tax gap. Enhanced dividend reporting will give HMRC better visibility over dividend income, helping them identify unpaid or underpaid tax more effectively.
How to prepare
To ensure compliance with the new requirements, we recommend the following:
- Ensure all dividends are properly documented including board minutes voting the dividends and confirming adequate distributable reserves, followed by the issue of dividend vouchers.
- Review your shareholding structure early, to avoid last-minute complications when completing the tax return.
- Maintain accurate and up-to-date shareholder records and dividend histories.
We are here to help
If you have any questions on these disclosure requirements and how to ensure the correct reporting is followed, please get in touch with a member of our specialist Tax team.
