Dividend Changes-If you’re a director-shareholder of a limited company, read on – your 2025/26 tax return will be more detailed than ever.
From 6 April 2025, HMRC is introducing new reporting requirements for individuals receiving dividends from “close companies” (typically, limited companies controlled by five or fewer people or directors). These changes are aimed at increasing transparency – and yes, there are penalties if you get it wrong.
What’s changing?
If you receive dividends from a company you’re a director of, you’ll need to disclose more information on your self-assessment tax return for 2025/26. Specifically:
- Whether you were a director of the company
- Whether it was a close company
- The name and registered number of that company
- The amount of dividends you received (even if that figure is £0)
- The highest percentage shareholding you held in that company during the year
Previously, you could simply report dividend income as a single total. Now, you must break it down company-by-company, even if you own multiple entities or your shareholding changed during the year.
Why the change?
HMRC says this is about transparency. Dividend payments made to directors of close companies are often tricky to track, especially when they’re lumped in with other investment income. The new requirements aim to close that gap – and help HMRC identify mismatches between what a company declares and what a director receives.
Will there be penalties?
Yes. A £60 penalty can apply for each failure to provide the required information. So if you leave off the company number or forget to mention your highest shareholding percentage — that could trigger a fine.
What you need to do now:
Don’t wait until January 2027 to start thinking about this. You should:
- Start recording dividend payments from each company separately
- Keep notes of your shareholding % throughout the year (and the highest point)
- Make sure you have the correct company registration numbers handy
- Let your accountant know that this info will be needed when preparing your next return
If you operate a limited company and pay yourself via dividends, this absolutely applies to you.
Please contact us if you’d like to discuss your Dividend payments then please contact us on 01386 366741 or email here and one of our advisers will be in contact.