• 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 in their return for that tax year.
• 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. A taxpayer who is a director of a close company must also include the following information in their tax return:
  • 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. Where the percentage shareholding changed during the relevant year, they should include the highest figure. HMRC’s guidance states that the percentage shareholding should be calculated by reference to the nominal value of the shares.

In broad terms, a company is close company where it is controlled by its directors or by five or fewer participators (eg, shareholders). For a more comprehensive definition, see HMRC’s guidance. 

Changes to the tax return 

HMRC has updated the tax return for 2025/26 to reflect these new requirements by adding the following boxes to the employment pages: 

• 7.1: name of the close company
• 7.2: registered number of the close company
• 7.3: dividends received from the close company
• 7.4: percentage shareholding in the close company 

The tax return already included boxes for the taxpayer to indicate whether they were a director of a company and whether that company was close, and to provide details of commencement and cessation dates for an unincorporated business. However, prior to the tax return for 2025/26, the taxpayer could choose whether or not to provide this information. It is now mandatory to provide this information, and new boxes have been added to the self-employment pages to make this clear for commencements and cessations.  

Background 

In April 2023, the government confirmed that it would update the tax reporting information requirements for unincorporated business and director shareholders, having first consulted on the changes between July and October 2022. In its response to a consultation on draft regulations, ICAEW stressed the need for HMRC to publish clear guidance, including on how to determine: 

• the person’s percentage shareholding where a company has issued more than one class of share; and
• the date on which a trade started or ended. 

Other changes proposed in the consultation included requiring employers to provide more detailed information on the number of employees’ hours worked in pay as you earn (PAYE) real-time information returns. In February 2025, the government announced that it would not be taking forward its plans for HMRC to receive data on employee’s hours. The announcement followed feedback from and was welcomed by ICAEW.  

The government believes that “improving the information provided to HMRC … will deliver better outcomes for taxpayers and businesses, as well as improving compliance, resulting in a more resilient tax system”. It is estimated that the changes will impact up to 1.2 million self-employed businesses each year and around 900,000 directors of owner-managed companies.  

Other issues 

ICAEW members have questioned how the new requirements will work and have raised potential issues in the following circumstances: 

• Unpaid directors. The notes to the tax return imply that a director does not need to complete the employment pages if they received no income from that role. ICAEW understands that common practice in these circumstances has been to record the directorship in the ‘Any other information’ section of the tax return. It is unclear if the employment pages must now be completed for unpaid directors, or if the new information requirements can be satisfied by including the information in ‘Any other information’. 
• Multiple directorships. Some people may hold multiple directorships, for example, as ‘trustees’ of charities. ICAEW understands that some tax return software products limit the number of employment pages that can submitted with a return. It is unclear how taxpayers in these circumstances will be treated by HMRC. 
• Director is not a shareholder. Members have reported receiving an error message when trying to file a return for a director of a close company who has no shares in that company, as box 7.4 does not appear to accept a ‘nil’ entry. 

ICAEW’s Tax Faculty has raised these matters with HMRC and will publish a follow-up article once HMRC has replied. To contact the faculty about these or other issues relating to the new requirements, please email Katherine Ford.