Change to dividend reporting to affect thousands of owner-managed businesses

From 6 April 2025, many directors will need to report dividend income in much more detail in their Self-Assessment tax return.

This change will affect an estimated 900,000 directors across the UK.

HM Revenue & Customs (HMRC) will now require directors to disclose the name and registration number of the company, the highest percentage shareholding held during the tax year, and the amount of dividend income received from that company.

These figures must be listed separately from dividends received from other sources.

At present, directors simply report total dividend income. HMRC has no visibility of how much comes from their own business versus other investments.

This change will allow HMRC to build a clearer picture of remuneration and target compliance activity more effectively.

Compulsory questions are coming

The question about whether a taxpayer is a director of a closed company will also become mandatory on the Self-Assessment return from 2025/26.

As a director, you will need to be prepared with accurate figures, particularly where shareholdings change during the year or where different share classes are involved.

These changes are an indication of a move towards increased transparency and more detailed individual reporting.

Employee hours reporting scrapped

The Government has abandoned its proposal to require the reporting of actual hours worked by employees through payroll.

Originally delayed to April 2026, the plan has now been dropped entirely due to concerns over the implementation cost, which was estimated at nearly £60 million.

New rules, new pressures

As of April 6, 2025, employer National Insurance Contributions (NICs) increased from 13.8 per cent to 15 per cent.

At the same time, the secondary threshold (the point at which employers start paying NICs) fell from £9,100 to £5,000, while the Employment Allowance increased from £5,000 to £10,000.

These changes, along with increases to the National Living Wage (NLW) and National Minimum Wage (NMW), occurred on the same date, adding further pressure to your budget.

If you own a business and need help preparing for the 2025/26 changes, then contact our team of expert accountants today.