Get Ready: More Reporting Required for Directors from April 2025.

More Reporting Required for Directors from April 2025.

From April 2025, directors of owner-managed businesses will need to provide more detail when filing their tax return for the 2025/26 tax year. This follows a confirmed update by HMRC, introducing extra reporting requirements designed to improve the quality of information they collect – and the precision of the tax system overall.

If you’re a director of a limited company, especially a family-run or owner-managed one, here’s what you’ll need to declare in your 2025/26 tax return:

• Whether you were a director during the tax year
• If so, whether the company qualifies as a ‘close company’
• The name and registered number of that company
• Any dividend income you received from it (including if none)
• Your percentage shareholding – and if that changed, the highest % you held during the year

This information will be captured separately from other dividend income.

For the self-employed, new reporting will also apply. If your business started or ended during the year, you’ll be required to include the start or end date in your self-assessment.

One proposed change – requiring employers to detail employees’ paid hours – has been dropped for now due to the administrative burden. That said, we expect HMRC will continue looking for ways to tighten reporting and target its enquiries more effectively.

Why is HMRC asking for this?

The short answer: clarity. HMRC wants to distinguish between dividend income from an individual’s own company and other sources. Many business owners choose to draw income via dividends rather than salary, and under the current system, it’s not always easy for HMRC to identify where that income comes from.

By gathering more targeted data, HMRC aims to improve communication and compliance, while reducing tax avoidance through dividend streaming or payroll manipulation.

This is another step towards the broader shift to real-time income reporting, particularly ahead of the rollout of Making Tax Digital for landlords and larger self-employed businesses in April 2026.

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What this means for you…

If you’re a company director or running your own business, these changes underline the importance of good record-keeping and sound remuneration planning.

At Lexington Wealth, we’re here to help you stay compliant and confident. If you’d like to ensure your income strategy remains tax-efficient and in line with evolving HMRC requirements, please don’t hesitate to reach out.

Get in touch with your usual contact at Lexington or call us directly — we’re here to help you navigate the ever-changing tax landscape.