HMRC have clarified the position on Self Assessment reporting requirements for directors of close companies and has updated its guidance for directors of charities.
Additional reporting requirements for directors of Close companies came into force for Self Assessment returns from 2025-26 onwards. The new requirements mean directors of close companies must report the following on their tax return:
- The name of the close company.
- The registered number of the close company.
- The amount of income they receive from dividends from that company in that tax year.
- The percentage of their shareholding.
The Self Assessment return already included boxes to indicate whether a taxpayer was a director of a close company, but completing these boxes was optional. The new rules mean directors of close companies are now obligated to complete the boxes.
- Only directors who currently need to complete a Self Assessment return need to report close company information.
- If the company is only a close company for part of the tax year, the new boxes must still be completed.
Uncertainty has surrounded the new reporting requirements, and the following issues were highlighted by members to the Institute of Chartered Accountants in England and Wales (ICAEW):
- Unpaid directors: the tax return guidance notes indicated that the employment pages did not need to be completed where a director had not received any income from that role. It was unclear if the employment pages should be completed for unpaid directors or whether the reporting requirements could be satisfied by entering the directorship in the 'any other information' box.
- Multiple directorships: some software was limiting the number of employment pages that could be submitted with a return.
- Director is not a shareholder: an error message appeared when trying to submit a return where the director had no shares in that company.
The ICAEW contacted HMRC for clarification.
HMRC have now confirmed the following:
- Where directors are unpaid and/or have zero shareholdings in the close company, they must still complete the new boxes on the tax return.
- Where 'zero' dividend income has been received, or there is no shareholding, '0' should be entered in the appropriate boxes.
- HMRC have also confirmed that listing unpaid directorships in the additional information box is not an acceptable option.
- Directors of dormant close companies must also complete the new boxes.
- Directors of registered charities or Community Interest Companies do not need to complete the new boxes where they did not receive, or become entitled to receive, any employment income or dividend income.
- This includes any other type of distribution from that company or any connected company.
- HMRC have updated the tax return guidance notes to reflect this.
ICAEW are still waiting for clarification from HMRC regarding multiple directorships.
HMRC have highlighted that a £60 penalty may apply for the incorrect completion of the close company boxes.
Useful guides on this topic
Close companies, definition and control
What is a Close company? What are the tax consequences? What is a Participator? What is meant by Control of company? What are the tests for Control?
Self Assessment return 2025-26: What's New?
2026 Self Assessment toolkit: top tips for completing tax returns for the year ending 5 April 2026. Additional reporting requirements for directors of close companies are one of the significant issues this year: what needs to be reported, and how? What is the latest guidance?
Directors' responsibilities and duties
What duties and responsibilities does a director have? What is the definition of 'director'?
External link
ICAEW: HMRC clarifies position on tax return requirements for directors