Directors – Even more tax reporting ahead!

With many self-employed traders just starting to get to grips with the extra reporting needed under Making Tax Digital for Income Tax (MTD IT), they (along with directors of close companies) will have to comply with new requirements to provide additional information in their self-assessment tax return (SATR) for 2025/26.

A company is a close company (broadly) where it is controlled by its directors or by five or fewer shareholders.

The following additional information will be required.

Traders
Where the taxpayer began or ceased to carry on a trade, profession or vocation during the tax year, they must include the date of the commencement or cessation.

Directors of close companies
The taxpayer must indicate whether they were a director of a company during the tax year and (if so) whether that company was a close company. Such a director of a close company must also include the following information:

– the name and registered number of the close company;
– the amount of dividend income they received from the company during the year; and
– their percentage shareholding in the close company.

Additional boxes on the SATR
HMRC has updated the tax return for 2025/26 to reflect these new requirements by adding additional boxes to the employment and self-employment pages. Note that the SATR already included boxes for the taxpayer to:

– indicate whether they were a director of a company and whether that company was close; and
– provide details of commencement and cessation dates for an unincorporated business.

However, prior to the tax return for 2025/26, providing this information was optional; it is now mandatory.

Please get in touch if you have any questions on these new tax reporting requirements. There may be unforeseen complications in some scenarios, for example determining the percentage shareholding owned when there is more than one class of share in issue.