In line with the ever-increasing amount of red tape affecting the UK’s SMEs, new disclosures are now required in 2025–26 Self-Assessment tax returns.
Taxpayers must now disclose whether they were a director of a company and whether that company was a close company during the tax year.
A close company is broadly defined as a UK-resident company controlled by five or fewer participators, or by any number of participators who are also directors. A shareholder may be classed as a participator. Additional guidance on the definition can be found here: https://www.gov.uk/hmrc-internal-manuals/company-taxation-manual/ctm60060
The additional disclosures are included within the SA102 Employment pages, specifically new boxes 7.1 to 7.4.
Taxpayers will now need to provide the following information:
- Whether the company was a close company
- The name of the company and its registered number
- The amount of dividends received from the company
- The percentage shareholding held by the taxpayer in the close company
HMRC guidance currently states that the percentage shareholding should be calculated by reference to the nominal value of shares, with the highest percentage held during the tax year being reported.
A separate SA102 Employment page will generally be required for each directorship.
The information could previously be provided voluntarily within the Employment pages, but disclosure is now mandatory for affected taxpayers.
Some practical challenges posed by these changes include:
- Listing multiple directorships where there are many, making completion more time-consuming
- Calculating percentage shareholdings where companies have multiple share classes with different rights attached
- Difficulties experienced by some software users where directors with no shareholding cannot currently enter a nil percentage in box 7.4
This move is consistent with HMRC gathering increasing amounts of data on taxpayers, with the apparent aim of improving cross-checking and compliance activity.
There is clearly still further work required by HMRC to ensure these new requirements operate effectively.
If you would like further help on this. Please contact us.
Author
Written by Sean Hackemann, Director of Specialist Accounting Solutions. Team SAS works with ecommerce businesses at £1 million revenue upwards, providing fractional CFO and management accounting services focused on cash flow, strategic advice, and financial decision-making.
