For self-assessment tax returns from 2025/26 onwards, directors of close companies will be required to split out the amount of dividend income received from their companies.

In very broad terms, a close company is one that is under the control of its directors or five or fewer shareholders. Most owner-managed companies are therefore close companies.

Reporting

Currently, a director only has to report a total dividend income figure on their tax return, so HMRC is not able to distinguish between dividends a director receives from their own company and dividends from other sources.

With dividends separated out, HMRC will be able to see the total remuneration package received by an owner-manager; helping them to focus their compliance activities.

Disclosure

The existing voluntary tax return question asking whether an individual is a director of a close company will be made mandatory. In addition, directors of close companies will need to disclose:

• the name of the company and its registration number;
• the percentage shareholding in the company; and
• the amount of dividend income received from the company for the tax year.

In regard to the percentage shareholding, this will be the highest percentage held during the tax year. For some directors, providing this information will not be straightforward; for example, where a company has different classes of shares.

The government estimates that the dividend data change will impact around 900,000 directors.