Change to dividend reporting to affect thousands of owner-managed businesses

From 6 April 2025, many directors will need to report dividend income in much more detail in their Self-Assessment tax return.

This change will affect an estimated 900,000 directors across the UK.

HM Revenue & Customs (HMRC) will now require directors to disclose the name and registration number of the company, the highest percentage shareholding held during the tax year, and the amount of dividend income received from that company.

These figures must be listed separately from dividends received from other sources.

At present, directors simply report total dividend income.

HMRC has no visibility of how much comes from their own business versus other investments.

This change will allow HMRC to build a clearer picture of remuneration and target compliance activity more effectively.

How will these changes affect me?

As with many of the changes that are currently being introduced, the goal is to ensure that businesses remain compliant.

You may find yourself at risk of noncompliance if you fail to update how you process information considering these changes.

The most effective way to stay ahead of the new dividend reporting is by updating any payroll or accounting software you currently employ.

If you have not yet taken the leap to utilise technology to get greater control of your finances, now might be the time to do so.

If you use in-house finance teams, make sure they are equipped and ready to implement the changes and that they are educated in ways to advise you of how to proceed with Self-Assessment returns.

For those seeking professional advice, it is wise to do this sooner rather than later.

As the tax year progresses, advisors are likely to become overrun with concerned directors seeking advice at the last minute.

You did not build your business by leaving everything to the last minute, and your tax considerations are no different.

Seek professional advice early to ensure that you can effectively plan for the changes and preserve the operationality of your business.

HMRC are attempting to make the system more transparent and gain greater protection against those with bad intentions.

Need help preparing your self-assessment tax return to account for these changes? Speak to our team today.