24.2.2026 | Tax

At first glance, the changes coming to the 2025/26 Self-Assessment tax return look fairly innocuous. Another box to fill in. Another small administrative tweak. The sort of thing most business owners assume their accountant will quietly deal with in the background. But here, Andrew Diver, Head of Tax at Beatons Group, examines why one of these changes – the way dividends from close companies are reported – is more than just a technical update.

Tax returns are rarely something people look forward to.

For some directors and business owners, they’re a once-a-year chore – gather the paperwork, hand it over to your accountant, sign where you’re told to sign and move on. The details of the form itself don’t usually attract much attention.

But occasionally, the form’s design tells you something important about what HMRC is thinking, not in headlines or policy announcements, but in the quiet changes to what they now want to know about you, your business and how money flows between the two.

The new way dividends from close companies are reported on the 2025/26 return is one of those moments. It’s a subtle shift in disclosure, but it carries a much louder message about scrutiny, transparency and the direction of travel for owner-managed businesses.

What does it mean?

From 2025/26, anyone receiving dividends from a close company will have to disclose more details on their tax return than before.

It’s no longer enough to report a single, simple total figure for dividend income. HMRC will now know exactly which company those dividends came from and what percentage of the business the recipient owns.

On the surface, this doesn’t change how much tax you pay.

But it fundamentally changes how visible your arrangements are to HMRC. By linking personal tax returns directly to Companies House and corporation tax data, HMRC is making it much easier to join the dots between ownership, control and how profits are distributed.

Why does it matter?

It matters because it brings certain structures into much sharper focus.

Over the years, many owner-managed businesses have used different classes of shares, dividend waivers and other mechanisms to distribute profits in a tax-efficient way. In many cases, these arrangements are legitimate.

In others, the commercial rationale can be harder to defend. Either way, they are about to become far more transparent.

One particularly telling detail is where this new disclosure sits on the tax return. Dividends from close companies now appear on the employment pages.

That may sound like a technical footnote, but it is quite revealing. It reflects HMRC’s increasing interest in situations where what is labelled as a “dividend” may, in substance, look and feel more like a payment for work done in the business.

Is this going to mean I can’t pay dividends?

No. It doesn’t mean dividends are suddenly off the table for directors and shareholders. But it does show a clear direction.

HMRC is becoming more confident in challenging arrangements that blur the line between capital and labour rewards, particularly where structures have been put in place primarily for tax rather than commercial reasons.

Where challenges succeed, the consequences can be significant, potentially bringing National Insurance into play alongside income tax.

What now?

For many business owners, this change won’t require any action.

If your share structure is straightforward and your dividends reflect genuine ownership, the new reporting requirements are unlikely to cause sleepless nights.

But if your company has more complex arrangements, this is a sensible moment to take stock. The question to ask is not just “is this technically compliant?”, but “how will this look when HMRC has the full picture in front of them?”

The reporting change itself is small. The message behind it is not.

For help and advice on this or any other accountancy queries, visit www.beatons.co.uk