Dividend Reporting Changes

Dividend Reporting Changes for 2025/26: What Directors and Business Owners Need to Know

The 2025/26 tax year brings a significant update to how dividend income must be reported — particularly for directors and shareholders of owner-managed companies (close companies). These dividend reporting changes are designed to give HMRC a clearer picture of how business owners are remunerated and to improve compliance.

Why dividend reporting changes matter

In previous years, directors and individual taxpayers only had to report the total amount of dividends received from all sources on their Self Assessment tax return.

From 6 April 2025, for the 2025/26 tax year onwards, a new dividend reporting requirement means that directors of close companies will need to provide much more detailed information about dividends received from their own business. (Bright Grahame Murray)

This is significant because:

HMRC previously had no way to tell how much dividend income came from a director’s own company versus external investments.
The new rules help HMRC understand the full remuneration package of owner-directors, which supports more accurate tax assessments and targeted compliance activity.

Who Is Affected by the dividend reporting changes?

The dividend reporting changes apply mainly to directors of “close companies” — generally companies controlled by five or fewer shareholders or directors.

It’s estimated this update will affect around 900,000 directors across the UK.

What You Must Report

Under the new rules, directors must separately disclose the following details for dividends received from their own company:

Company name
Company registration number
The percentage shareholding in the company (usually the highest percentage held during the year)
The amount of dividend income received from that company in the tax year

These figures must be listed separately from any dividend income received from other sources, such as external investments.

What’s NOT Changing

Directors will still need to report dividends from other sources (e.g., stock dividends, unit trusts) in their Self Assessment return — but those should remain separate from dividends paid by the company they control.

HMRC’s move also appears to signal a shift towards greater data accuracy and transparency rather than simply increasing compliance burden, though the detail required does mean more work when preparing returns.

Practical Steps for Directors

To comply with the new rules:

Track dividends paid by each company you control during the year
Confirm your shareholding percentage at all relevant times during the year
Ensure your accounts and dividend vouchers clearly show the amounts being declared
Update your Self Assessment information — dividend reporting now requires additional fields on the return

How This Affects Your Tax Return Preparation

If you prepare your own Self Assessment or work with an accountant:

Ensure dividend details are broken down by source
Provide clear information on your own company dividends versus external dividends
Check for any changes to the Self Assessment form where these new fields appear

Getting this right helps avoid errors or compliance triggers from HMRC, and makes reviewing your remuneration more straightforward.

Looking Ahead

These changes are part of a broader trend toward more granular tax reporting and improved data matching by HMRC. While this affects owner-directors most immediately, it’s a reminder that tax reporting expectations continue to evolve. (GOV.UK)

If you’d like help understanding how this affects your filing or if you need support preparing your dividend information for the 2025/26 tax year, please get in touch — I’m happy to help.

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