New Self-Assessment Requirements for Traders and Close Company Directors (2025/26)

A Quiet but Consequential Change

 If you are self-employed or a director of a close company, it is important to understand the key changes being introduced to the 2025/26 Self-Assessment (SA) tax return. New regulations introduced in January 2025 make it mandatory to provide additional information that was previously optional, and failing to comply could cause issues with HMRC.

What Has Changed?

Regulations laid in January 2025 introduce new mandatory information requirements for two categories of taxpayer.

1) Self-Employed Traders

Where a taxpayer commenced or ceased trading during a tax year, they must now include the precise date of commencement or cessation in that year's return. Providing the information is now mandatory. This is no longer optional.

2) Directors of Close Companies

If you are, or were, a director during the tax year, you must now confirm the following:

·  Whether you held a directorship during the year

·  Whether that company was a close company

If you directed a close company, you must also provide the following information:

·  The company name and registered number

·  The amount of dividend income received from that company during the year

·  Your percentage shareholding in the company (use the highest figure if your shareholding changed during the year, calculated by reference to the nominal value of shares)

What is a close company? In broad terms, a company is considered "close" if it is controlled by its directors or by five or fewer shareholders (participators).

Who Is Affected?
Approximately 1.2 million self-employed taxpayers carrying on a trade and around 900,000 directors of owner-managed companies are affected by these changes each year.

Changes to the 2025/26 Tax Return

HMRC has updated the employment pages of the 2025/26 tax return to include new boxes:

• The name and registered number of the close company;
• The value of dividends received from that company, reported separately from other UK dividend income; and
• Their percentage shareholding, recorded as the highest percentage held at any point during the tax year.

While some of these fields existed in previous returns, they were voluntary. They are now mandatory, and new boxes have been added to the self-employment pages to make commencement and cessation reporting equally clear.

Why Is HMRC Introducing These Changes?

The government first consulted on these reforms between July and October 2022, confirming the changes in April 2023. The aim is to improve tax reporting accuracy and compliance.
HMRC believes improving the information it receives will "deliver better outcomes for taxpayers and businesses, resulting in a more resilient tax system".
One proposal that did not go ahead was requiring employers to report detailed data on employees' hours worked via PAYE real-time information (RTI) returns. Following feedback, including from ICAEW, the government dropped this plan in February 2025.

Practical Challenges: Where It Gets Complicated

The new requirements create particular difficulties in three specific scenarios that are common in the owner-managed business sector.

• Unpaid Directors
• Multiple Directorships
• Non-Shareholder Directors

1. Unpaid Directors
A person who is appointed as a director of a close company but receives no salary, no dividends, and no other remuneration faces a genuine dilemma. It is currently unclear whether unpaid directors must now complete the employment pages or whether the 'Any other information' section still satisfies the requirement. If no income has been received from the company, it is arguable that there is no basis for including an employment page for that directorship in the return at all.

2. Multiple Directorships
Some individuals hold several directorships, for example, as charity trustees. Certain tax return software products limit the number of employment pages that can be submitted with a single return. How HMRC will handle these cases has not yet been clarified.

3. Non-Shareholders Directors
A director who holds no shares in the close company, perhaps a professional non-executive director or a family member appointed to the board without any equity interest will still need to complete the director-status box and confirm close company status. They will then need to enter zero for both the dividend value and the shareholding percentage. As noted above, the software issue surrounding zero entries makes this more complicated than it ought to be, and advisers should verify that their software handles this correctly before finalising any returns.

The Link to Making Tax Digital

MTD for Income Tax applies from April 2026 to those with combined self-employment and property income above £50,000, with the threshold falling to £30,000 in April 2027. The new director disclosures will apply equally under MTD, meaning they will need to be embedded in compliant software and submitted alongside quarterly updates and annual declarations.

How Consultax Chartered Accountants Can Help

Navigating the new self-assessment requirements and the transition to Making Tax Digital can feel daunting, but you do not have to face it alone. At Consultax Chartered Accountants, we specialise in supporting directors of close companies, owner-managed businesses, and self-employed professionals through every stage of the MTD journey. From registering for MTD for Income Tax and setting up HMRC-compliant digital record-keeping, to ensuring your 2025/26 self-assessment return correctly captures all mandatory close company disclosures including dividends, shareholding percentages, and company registration details. Our experienced team handles the complexity so you do not have to. We work proactively with our clients throughout the year, not just at filing time, ensuring that records are accurate, deadlines are met, and compliance risks are identified before they become problems. As HMRC's digital transformation gathers pace, having a trusted adviser in your corner is not just helpful, it is essential.

Compliance Tips for Directors

• Obtain your company registration numbers for every close company in which you hold a directorship available from Companies House.
• Record dividends by company throughout the year, supported by board minutes and dividend vouchers.
• Track shareholding changes as they happen. Report the highest percentage held at any point in the year, not the year-end figure.
• Never leave new boxes blank — enter zero where applicable, and verify that your software supports this.
• Register for self-assessment by 5 October 2026 if this is your first return for 2025/26.
• Engage your adviser early — additional information requirements mean preparation will take longer than in previous years.