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Dividend Income: Self Assessment Changes From 2025/26

Dividend Income: Self Assessment Changes

Directors of close companies in the UK who receive dividend income will be subject to new rules in their self-assessment tax returns starting from the 2025/26 tax year. These rules require providing more comprehensive details about dividend income, rather than only reporting the total amount as is currently required.

These new rules will impact a significant number of company directors. Please be assured that Stan Lee Accountancy Ltd is committed to supporting you in ensuring compliance with these regulations.

The Current Requirements:

At present, individuals are required to report the total amount of dividend income received on their self assessment tax return, without specifying the source—whether from a close company or external investments. There is no requirement to distinguish between dividends received from one’s own company and those derived from other investments or shareholdings.

The New Rules (From Tax Year 2025/26 Onwards)

If you receive dividend income from 6 April 2025 onwards, whether from your own company, external sources, or both, you are required to report this income with comprehensive details as follows:

  • The name of the company along with its registration number
  • The amount of dividends distributed by your close company
  • Dividends received from external investments or shareholdings
  • Your percentage shareholding in the company during the tax year (if this changed during the year, please report the highest percentage held)

Why is HMRC introducing these new rules? The enhanced reporting requirement aims to increase transparency and ensure accurate tracking of dividends.

Dividend Income: Self Assessment Changes

Getting Ready and Preparing Ahead:

  • Start keeping dividend records separately from your own company and external sources as well.
  • Have clear supporting documents for each dividend payments
  • Maintain proper company secretarial for your shareholdings
  • Get in touch with your tax advisors about this new rules

Look for guidance from HMRC

Final Thoughts:

As a client of Stan Lee Accountancy Ltd, you can be assured that we will manage these changes on your behalf, ensuring a smooth and stress-free process. However, if you choose to file your return independently—either online or via paper—we strongly recommend consulting HMRC guidance and seeking expert advice.

You are welcome to contact our tax team at Stan Lee Accountancy Ltd for a complimentary initial consultation regarding your dividend income tax concerns, with no obligation required.