What are the extra reporting requirements for dividends and payroll from the 25/26 tax year?

14 Nov 2023

HMRC are making changes to regulations that will impact owner-managed businesses and employers. These changes will come into effect from April 2025 and are aimed at enhancing the collection of financial information and ensuring better compliance with tax-related matters.

Here Chris Speakman provides an overview of what we know about these changes so far:

What are the Dividend Disclosure Rules (Effective April 2025)?

Starting from the tax year 2025-26, new rules regarding dividend disclosure will be enforced. Individuals associated with owner-managed businesses will be required to use their self-assessment tax return to segregate their dividend income from their own companies from other sources of dividend income. They must also specify the percentage share they hold in their own companies.

HMRC will request specific information through the SA102 form, including details about the value of dividends received and the percentage shareholding in a close company where the individual serves as a director.

How do I report employee working hours?

Employers must provide detailed information about the number of hours worked by individual employees using real-time information through PAYE reporting commencing from April 2025. This change has been introduced to improve Government support for the labour market.

Why have HMRC changed the dividend reporting rules?

It is essential to note that these changes have been initiated as part of broader efforts to combat tax evasion and enhance compliance. HMRC aims to achieve better compliance, particularly after investigations were delayed due to the pandemic.

While these changes are significant, HMRC has scaled back some of its initial plans after consultations in 2022. Notably, they have abandoned the collection of data related to employee job titles, precise working locations, and specific details about office and factory locations. The Government has committed to taking a measured and proportionate approach to data collection, focusing on readily available information to customers and avoiding unnecessary administrative burdens.

What are the penalties for not following the new dividend reporting rules?

Failure to comply with these legislative changes may result in a penalty of £60.

We understand that these changes may raise questions and concerns.

Please do not hesitate to contact us for further clarification or guidance on how these changes may affect your business.

Contact us here

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