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HMRC is asking THIS question on your tax return…

3rd Sep­tem­ber 2026

Tax return HMRC business owner files

Com­pa­ny direc­tors:

HMRC is ask­ing THIS ques­tion on your tax return. And it could be more impor­tant than it first appears… For the 2025/26 Self Assess­ment tax return, HMRC is ask­ing: “Is this a Close com­pa­ny?” But why? Because HMRC is now ask­ing for much more detail about how you take mon­ey out of your com­pa­ny. If you’re a shareholder/director, your tax return will now iden­ti­fy:

  • Which com­pa­ny you received div­i­dends from
  • The company’s Com­pa­nies House reg­is­tra­tion num­ber
  • Your high­est share­hold­ing per­cent­age dur­ing the year
  • The exact div­i­dends you received from that com­pa­ny

HMRC can then cross-check fig­ures against the company’s:

  • Accounts
  • Cor­po­ra­tion Tax return
  • Pay­roll records
  • Com­pa­nies House records

In oth­er words, HMRC has more ways than ever to spot when the num­bers don’t match. So, what is a “Close” com­pa­ny? Broad­ly, it’s a com­pa­ny con­trolled by 5 or few­er share­hold­ers, or by share­hold­ers who are also direc­tors. That means most own­er-man­aged com­pa­nies will fall with­in the def­i­n­i­tion. What should com­pa­ny direc­tors do? Make sure your div­i­dend paper­work is spot on. That means prop­er­ly doc­u­ment­ing:

  • Div­i­dend dec­la­ra­tions
  • Board min­utes
  • Div­i­dend vouch­ers
  • Share­hold­ings
  • Div­i­dends report­ed on Self Assess­ment

A div­i­dend that has been paid but isn’t prop­er­ly doc­u­ment­ed can cre­ate unnec­es­sary ques­tions — par­tic­u­lar­ly when HMRC is active­ly com­par­ing infor­ma­tion from dif­fer­ent sources. The mes­sage is sim­ple: don’t just get the tax return right. Make sure the com­pa­ny records sup­port it too. If you’re a com­pa­ny direc­tor and want to check that your div­i­dend records and Self Assess­ment return are in order, our tax team at Rus­sell & Rus­sell can help.
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