From the 2025/26 tax year, company directors in the UK will face expanded reporting obligations when completing their Directors’ Tax Returns. While the changes do not introduce new taxes, they significantly increase the amount of information HMRC expects directors — particularly those of owner-managed or “close” companies — to disclose.

The reforms form part of HMRC’s wider strategy to improve data quality, increase transparency around shareholder remuneration, and strengthen compliance monitoring across small and medium-sized businesses. For many directors, especially those who have historically prepared their own returns, the additional administrative burden should not be underestimated.

What Is Changing?

The key changes affect the SA102 Employment pages of the Self Assessment return.

Historically, directors were asked to indicate:

• whether they were a company director; and
• whether the company was a close company.

However, completion of these fields was largely voluntary. From 2025/26 onwards, the disclosure becomes mandatory.

In addition, directors of close companies must now provide significantly more detail for each company in which they hold a directorship.

The new mandatory disclosures include:

• the company name;
• the company registration number;
• the amount of dividend income received from that company during the tax year; and
• the director’s percentage shareholding in the company.

Importantly, a separate SA102 employment page must be completed for each directorship. HMRC has confirmed that a single white-space disclosure will not be sufficient.

Understanding “Close Companies”

The rules primarily target directors of “close companies”, which are broadly companies controlled by:

• five or fewer shareholders; or
• any number of directors who are also participators/shareholders.

In practice, this means the vast majority of owner-managed businesses and family companies will fall within scope.

For contractors, consultants, family businesses, and SME directors who extract profits through a combination of salary and dividends, the changes are especially relevant.

Why HMRC Is Introducing These Changes

The reforms did not emerge in isolation. They are part of HMRC’s broader long-term compliance and digitalisation strategy.

For several years, HMRC has been seeking greater visibility over how owner-managed businesses operate — particularly how directors remunerate themselves through dividends rather than salary. Existing Self Assessment returns allowed taxpayers to report total dividend income, but HMRC could not easily identify:

• which dividends came from the taxpayer’s own company;
• how much control the taxpayer had over the company; or
• how closely linked dividend income was to directorship and share ownership.

The new SA102 disclosures are intended to close that information gap.

The changes also align with HMRC’s wider move toward data-driven compliance, including:

• Making Tax Digital (MTD);
• increased cross-referencing between Companies House and HMRC data;
• improved identification of owner-managed businesses; and
• targeted compliance activity using enhanced analytics.

In effect, HMRC is building a clearer picture of how directors extract value from closely controlled companies.

Practical Implications for Directors

Although the changes may appear relatively modest on paper, they are likely to create practical issues for many taxpayers and advisers.

Increased Record-Keeping

Directors will need accurate records of:

• dividend payments received from each close company;
• changes in shareholdings during the year; and
• directorship appointments and resignations.

HMRC guidance indicates that the highest percentage shareholding during the tax year should be reported.

More Complex Tax Returns

Directors with multiple companies will face more administrative work because separate SA102 pages are required for each directorship.

This may particularly affect:

• serial entrepreneurs;
• property company structures;
• family investment companies; and
• consultancy groups with several entities.

Potential Penalties

Failure to provide the required information may attract penalties. Current guidance suggests that penalties of £60 could apply for missing information, although there remains some uncertainty over whether this applies per omission or per return.

Who Is Affected?

The new rules do not automatically require every director to file a tax return.

HMRC has separately reduced the number of individuals automatically brought into Self Assessment, and simply being a director no longer creates an automatic filing obligation in many cases.

However, where a director is already required to file a return — for example due to dividend income, property income, or self-employment — the additional reporting requirements will apply.

Preparing for 2025/26

Directors should begin preparing now rather than waiting until the first filing deadline in January 2027.

Recommended steps include:

• reviewing whether companies qualify as close companies;
• ensuring dividend records are complete and reconciled;
• confirming Companies House records are up to date;
• documenting shareholdings clearly; and
• discussing the new requirements with accountants or tax advisers before the year end.

Software providers and tax agents are also expected to update their systems to accommodate the revised SA102 disclosures.

Conclusion

The 2025/26 changes to directors’ tax returns represent another step in HMRC’s broader shift toward enhanced transparency and digital compliance.

While the reforms do not alter the underlying tax treatment of salaries or dividends, they provide HMRC with significantly more granular information about owner-managed businesses and the individuals behind them.

For company directors, the message is clear: tax reporting expectations are increasing, and maintaining accurate, well-organised records will become more important than ever.