HMRC has clarified the Self Assessment reporting requirements for directors of close companies, and updated its guidance for directors of charities. If you are a company director, it’s worth checking whether the new rules apply to you before you file your next return.
What is a close company?
A close company is one that is owned or controlled by a small number of people, usually five or fewer shareholders.
What is changing?
Additional reporting requirements for close company directors apply to Self Assessment returns from 2025-26 onwards. Affected directors must now report:
- The name of the close company
- The registered number of the close company
- The amount of dividend income received from that company in the tax year
- The percentage of their shareholding
Only directors who already need to complete a Self Assessment return are affected. However, the information must be provided even if the company was a close company for only part of the tax year.
What has HMRC clarified?
It was previously unclear whether unpaid directors, or directors without shares, had to complete the new boxes. HMRC has now confirmed that they do.
You must still complete the boxes if you:
- Are an unpaid director
- Hold no shares in the close company
- Are a director of a dormant close company
Where you have received no dividend income or hold no shares, enter ‘0’ in the relevant boxes.
Exceptions for charities and Community Interest Companies
Directors of registered charities or Community Interest Companies do not need to complete the new boxes, provided they have not received, nor become entitled to receive, any employment income or dividend income from the company. This also covers any other type of distribution from that company or any connected company.
Watch out for penalties
HMRC has highlighted that a £60 penalty may apply if the close company boxes on the tax return are completed incorrectly, so it’s important to get them right.
Practical next steps
- Check whether any company you direct is a close company, even if only for part of the tax year.
- Gather the company name, registered number, dividends received and your percentage shareholding.
- Remember to complete the boxes even if you are unpaid, hold no shares or the company is dormant, entering ‘0’ where appropriate.
- If you direct a charity or Community Interest Company, confirm whether you have received any employment or dividend income that would mean the exception does not apply.
How we can help
If you need help completing your tax return, or are unsure whether these requirements apply to you, please get in touch. We’d be happy to help.
