HMRC rule change leaves thousands of business owners at risk of new penalties - are you affected?

The deadline to submit the new information is January, 31 2027

Thousands of directors running small, family-owned businesses could face £60 fines under new HMRC tax rules.

Many may not realise they need to provide extra information on their self-assessment tax return, raising the risk of being penalised.

HMRC has introduced new reporting requirements for directors of close companies from the 2025/26 tax year. They must now disclose more details about their dividend income and shareholdings on the SA102 Employment pages of their self-assessment tax return.

The deadline to submit the new information is 31 January 2027. However, accountants say the changes have received little attention, leaving many business owners unaware they need to take action.

Emma Rawson, of the Association of Taxation Technicians, said: "Our concern is people won't know about this, won't do it and will get penalised."

Chris Etherington, of accountancy firm RSM, said: "These new reporting requirements have not been widely publicised, so directors may not know they exist or how the rules apply to them."

A close company is broadly defined as a UK-resident firm controlled by its directors or by five or fewer shareholders. Directors of such companies must now confirm on the SA102 form that they held a directorship during the tax year and that the business was close.

They must also supply the company's name and registration number, the total dividend income received from the firm, even if that amount was zero, and their percentage shareholding based on the nominal value of shares held.

Where a director's stake changed during the year, they are required to report the highest percentage owned at any point. Those holding directorships at more than one close company must fill in a separate SA102 for each role.

HMRC can levy a £60 penalty for every piece of information that is missing or wrong. Larger penalties may follow if errors lead to an inaccurate tax return.

The ATT has raised concerns that HMRC's own guidance on the new rules is contradictory. Notes accompanying the 2025/26 tax return state that directors need to complete the Employment pages if they "received income as a company director".

Yet HMRC has separately confirmed that the pages must be filled in even when no income was received. The tax authority said it is updating this guidance.

There is also a risk that the changes could trip up directors who accidentally fail to declare dividend income. Under the new system, dividends from the company must be reported on the SA102 form as well as being declared separately elsewhere in the return.

Ms Rawson said: "We worry people will accidentally not declare dividend income." She added: "It would seem really unfair to penalise people for not declaring income by mistake."

Business owners who received no dividends must still enter £0 rather than leaving the box empty, or they could be penalised.

The ATT has urged HMRC to waive penalties for the 2025/26 tax year to give directors time to get to grips with the new obligations.

HMRC brought in the rules as part of a broader drive to narrow the tax gap. Small businesses are responsible for 62 per cent of the UK's £59.2bn in uncollected tax.

The tax authority is also looking at going further. In March 2026, HMRC launched a consultation on requiring close companies to report all transactions with their shareholders and other participators.

This would cover payments made by cash or bank transfer, asset sales and purchases, dividends, loans and any other transfers of value.

Companies would need to provide details such as the recipient's name, address and National Insurance number so HMRC could cross-check against personal tax returns. That consultation closed on 10 June 2026.

An HMRC spokesman said: "These changes will improve our understanding of how directors are paid so we can better support them with their tax affairs. We've engaged extensively with stakeholders since we started consulting on the changes three years ago and we're updating our guidance to help directors get things right."

The spokesman added: "We'll be taking a considered approach to directors who've made reasonable efforts to meet their obligations."

The new reporting burden arrives alongside the rollout of Making Tax Digital, which obliges sole traders and landlords to send quarterly updates to HMRC. The first filing deadline for those earning more than £50,000 a year falls on 7 August.

Separately, HMRC's proposals to make self-employed workers pay tax more frequently have drawn criticism. The Chartered Institute of Taxation has warned the plans could leave millions dealing with "confusion" and "cash-flow issues".