New HMRC Rules for Ltd Directors: What You Must Declare on Your 2025/26 Self Assessment
If you are the director of a limited company and you submit a Self Assessment tax return, HMRC has added new mandatory fields to the 2025/26 return that every director must complete. The new boxes require detailed information about your dividends and shareholding — and failing to fill them in correctly could land you with an automatic £60 penalty. Here is what has changed, what you need to declare, and why it matters.
- New mandatory boxes appear on the employment page of the 2025/26 Self Assessment return for company directors.
- For each directorship, you must declare whether the company is a close company, its name and Companies House number, dividends you received, and your highest shareholding percentage during the year.
- Failing to provide the required information attracts an automatic £60 penalty.
- HMRC has been significantly increasing its scrutiny of close company dividends — tight, compliant procedures are now essential.
- The 2025/26 Self Assessment deadline is 31 January 2027 for online filing.
What Is a Close Company?
Before diving into what you need to declare, it is worth clarifying what HMRC means by a “close company.” A close company is a UK resident company that is controlled by five or fewer participators (shareholders), or by any number of participators who are also directors of that company.
If you own and run your own limited company — even if you are the sole director and shareholder — your company is almost certainly a close company. The same applies to most small and medium-sized owner-managed businesses with a handful of shareholders. This new reporting requirement is likely to affect the vast majority of 360Accounts’ limited company clients.
What Are the New Mandatory Boxes?
For the 2025/26 tax year, the employment page of your Self Assessment return now includes additional fields for each directorship you hold. You will need to provide the following for every company where you are a director:
- Close company status — whether or not the company is a close company.
- Company name and registration number — the legal name and Companies House number of the company.
- Dividends received — the total dividends you received from that close company during the 2025/26 tax year.
- Highest percentage shareholding — the highest percentage of shares you held in the company at any point during the tax year.
A penalty of £60 applies for each directorship where the required information is not provided. If you hold directorships in more than one company, each missing entry could attract a separate penalty. This is an automatic charge — HMRC does not need to open an enquiry before issuing it.
Why Is HMRC Doing This?
This change sits within a broader push by HMRC to increase transparency around owner-managed company dividends. In recent years, HMRC has substantially ramped up its scrutiny of close companies — particularly around how dividends are declared and distributed, whether dividend procedures are correctly documented, and whether distributions are proportionate to shareholdings.
Dividends from close companies have historically been an efficient way for directors to extract profits at lower tax rates than salary. HMRC has become increasingly concerned that some companies are not following correct procedures — for example, failing to hold board meetings to formally declare dividends, or distributing disproportionate amounts to lower-rate taxpaying spouses or family members. The new Self Assessment boxes give HMRC a direct data feed to cross-reference against company accounts filed at Companies House.
What Should Directors Do Now?
If you are a director of one or more limited companies, there are several practical steps to take before your 2025/26 Self Assessment return is due:
- Gather your Companies House registration numbers for each company in which you hold a directorship.
- Confirm whether each company is a close company — if in doubt, speak to your accountant. Most owner-managed companies will be.
- Record all dividend payments received from close companies during the 2025/26 tax year (6 April 2025 — 5 April 2026), including the amounts and dates.
- Check your shareholding percentage at the highest point during the year — if your percentage changed (for example, due to a share issue or transfer), note the peak figure.
- Review your dividend procedures — ensure board meeting minutes are in place for every dividend declared and that procedures are lawful and compliant.
- Notify your accountant of all directorships held during the year, including any that started or ended mid-year.
Tightening Up Dividend Procedures
In light of HMRC’s increased focus on close company dividends, it is an ideal moment to ensure your dividend procedures are watertight. At a minimum, every dividend payment should be supported by:
- A board meeting minute formally declaring the dividend, including the date, amount per share, and class of share.
- A dividend voucher issued to each shareholder, showing the amount payable and any tax credit.
- Confirmation that the company has sufficient distributable reserves at the point of declaration — paying a dividend when reserves are insufficient is unlawful.
HMRC can — and does — reclassify informal dividend payments as salary where proper procedures have not been followed. Salary attracts National Insurance contributions (both employer and employee), which can significantly increase the tax cost. Getting the paperwork right is not just about compliance — it can protect you from an unexpected and avoidable tax bill.
What If You Hold Multiple Directorships?
If you are a director of more than one company — which is common among serial entrepreneurs and those running multiple group entities — you will need to complete the new boxes separately for each directorship. Do not overlook dormant companies or those where you hold a non-executive role — the reporting requirement applies to all directorships held during the year, regardless of whether the company was active or paid you a dividend.
Even if a company was dormant throughout the year and paid no dividends, if you held a directorship, you will still need to include it on your return and confirm its close company status. Make sure you have a complete list of all companies in which you were a director at any point between 6 April 2025 and 5 April 2026.
The Deadline and Next Steps
The 2025/26 Self Assessment return must be filed online by 31 January 2027. While that may feel some distance away, gathering the information — particularly across multiple directorships — takes time. Starting now means you can resolve any queries well before the deadline, and ensures your dividend records and company procedures are in order before HMRC comes looking.
If you are a 360Accounts client and hold one or more directorships, please get in touch so we can make sure your return is complete, your procedures are compliant, and you avoid the £60 penalty entirely.
Director of a Limited Company? Let’s Review Your Return Early
Our team at 360Accounts can help you gather the required information, review your dividend procedures, and make sure your 2025/26 Self Assessment is complete and penalty-free.
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