HMRC has provided further clarification on the new Self Assessment reporting requirements for directors of close companies, following concerns raised by ICAEW about how the rules would work in practice.
The clarification answers a number of questions that accountants and directors have been asking since the new requirements were introduced for the 2025/26 tax year.
What has changed?
Directors who are already required to complete a Self Assessment tax return must now complete additional sections on the employment pages (SA102) of their return.
This includes:
- Box 6 – confirming whether they were a director of the company.
- Boxes 7 to 7.4 – providing information about the close company, where applicable.
These additional disclosures are intended to give HMRC more information about directors of close companies.
Unpaid directors are still affected
One of the biggest areas of uncertainty was whether unpaid directors needed to complete the new boxes.
HMRC has now confirmed that they do. Directors who receive no salary, no remuneration and no dividends must still complete the close company sections of the return.
Where no dividends have been received or there is no shareholding, a value of "0" should be entered in the relevant box. Leaving those boxes blank can lead to filing errors.
HMRC has also confirmed that simply mentioning an unpaid directorship in the "Any other information" section of the return is not an acceptable alternative.
Directors of dormant companies must also comply
The requirement does not stop because a company is dormant.
HMRC has advised that directors of dormant close companies must still complete the close company boxes if they are already within Self Assessment.
An exemption for charities and CICs
HMRC has updated its guidance to confirm that unpaid directors of registered charities and Community Interest Companies (CICs) do not need to complete the close company boxes where they:
- Did not receive any employment income;
- Did not receive any dividend income;
- Did not become entitled to receive such income; and
- Did not receive any other form of distribution from that company or a connected company.
The multiple directorship problem remains
A practical issue raised by ICAEW was that some tax software packages limit the number of employment pages that can be included in a tax return, often to around eight.
While the charity and CIC exemption may help in some cases, it does not solve the problem for directors who hold multiple roles in private companies, family businesses or company groups.
HMRC has since updated its online guidance to say that a separate employment page should be completed for each employment or directorship wherever possible. Where the number of directorships exceeds the pages available, taxpayers should use the available pages first for employments or directorships that require employment-related information, with remaining directorships disclosed in the "Any other information" section.
Could there be penalties?
HMRC has indicated that a £60 penalty may apply where taxpayers fail to complete the required close company information. This can include missing employment pages or incomplete disclosures.
However, HMRC has also said it will take a "considered approach" when reviewing compliance, taking account of the circumstances and the efforts made by taxpayers to meet their obligations based on the guidance available at the time.
Do directors need to register for Self Assessment because of these changes?
No.
HMRC has confirmed that these reporting requirements only apply to directors who are already required to submit a Self Assessment tax return. A director does not need to register for Self Assessment solely to provide close company information.
HMRC has also clarified that the reporting requirements apply where a company was a close company for any part of the tax year, not just for the entire year.
Key takeaway
If you're already completing a Self Assessment tax return and are a director of a close company, you'll need to review the new SA102 reporting requirements carefully. The rules may apply even if you're unpaid, have no shareholding, or your company is dormant.
Source
This article has been adapted from guidance published by ICAEW following clarification from HMRC. You can read the original article here: HMRC clarifies position on tax return requirements for directors.