In April 2025, HMRC will implement new rules regarding the disclosure of dividend payments, requiring business owners to provide specific information about their dividend earnings. This blog post aims to explore the key details of this upcoming change and its implications for owner-managed businesses. Read on to understand the importance of complying with HMRC’s dividend information collection requirements and how it can impact your business.
Understanding the New Rules
From tax year 2025-26 onwards, HMRC will grant additional powers to collect information on the amount of dividend payments received by directors of owner-managed businesses. Business owners will be required to use their self-assessment tax return to distinguish the dividend income earned from their own companies from other dividend income sources. They must also provide information about the percentage share they hold in their own companies.
Compliance with HMRC Requirements
To ensure compliance with these new rules, business owners will need to provide detailed information on the SA102 form related to the value of dividends and the percentage shareholding in their close company, where they hold a directorship. Failing to comply with the legislation may result in a penalty of £60.
Rationale Behind the Data Collection
While some stakeholders have raised concerns about the need for such extensive information, HMRC asserts that collecting this data will contribute to improving government support for the labor market. These changes are also part of broader efforts to combat tax evasion and enhance compliance.
Scaling Back the Initial Plans
Following the original consultation in 2022, HMRC scaled back its initial plans based on feedback received from stakeholders. Consequently, the tax authority abandoned the collection of data on employee job titles, precise working locations, and specific details about the nature of work performed by self-employed individuals. The decision was made to avoid unnecessary data collection and administrative burden. However, HMRC will continue to review data collection requirements for potential future updates.
Implications for Self-Employed Individuals
Self-employed taxpayers will be required to provide information on the start and end dates of their self-employment using their self-assessment tax return. It is important for self-employed individuals to comply with these requirements to avoid penalties and ensure accurate reporting.
Understanding and complying with HMRC’s dividend information collection requirements is crucial for owner-managed businesses. By providing the necessary information and ensuring compliance, business owners can avoid penalties and contribute to improved government support for the labor market. Stay updated and prepare for the upcoming changes to maintain a smooth operation within your business.
Remember, accurate and timely reporting is key to meeting HMRC’s requirements and navigating the evolving landscape of taxation regulations.
Thank you for reading our blog. If you have any further questions or require assistance with HMRC’s dividend information collection, feel free to reach out to our team at STS Europe.
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This guide is an informative piece and does not constitute tax advice for individual matters.
