Company Directors: New Self Assessment Reporting Rules From 2025/26

HMRC has introduced tightened Self Assessment reporting requirements for company directors, effective from the 2025/26 tax year. If you are a director of a UK limited company, whether or not you are UK resident, you should understand these changes.

What Has Changed?

From 6 April 2025, HMRC requires all company directors to file a Self Assessment tax return, regardless of whether they have previously been exempt or whether HMRC has formally issued a notice to file. This change reflects HMRC's increased focus on ensuring that director remuneration, including salary, dividends, benefits in kind, and loans, is properly reported and taxed.

Key changes include:

1. Mandatory registration: All directors (including non-executive directors) must register for Self Assessment by 5 October following the end of the tax year in which they first become a director.

2. Reporting of all income: Directors must report all sources of income, including dividends received from their company, even where these are within the dividend allowance (currently £500 for 2024/25).

3. Director's loan accounts: Overdrawn director's loan accounts (Section 455 tax) must be disclosed and reconciled in the annual return.

4. Benefits in kind: All benefits in kind (company cars, private medical insurance, etc.) must be reported on form P11D and declared in the Self Assessment return.

Who Is Affected?

You are affected if you are:

• A director of a UK limited company, regardless of whether you are paid a salary
• A director of an overseas company with UK tax obligations
• A non-executive director receiving fees or share options
• An expatriate director, whether UK resident or non-UK resident

Non-UK-resident directors with no UK income other than director's fees from a UK company may have limited UK tax obligations, but should still confirm their position with a specialist.

Penalties for Non-Compliance

HMRC has signalled that it will take a firmer approach to director non-compliance. Penalties for late filing and late payment of tax apply in the usual way:

• Late filing: £100 automatic penalty from day one; escalating daily penalties after three months
• Late payment: 5% surcharge on unpaid tax after 30 days, with further surcharges at 6 and 12 months
• Deliberate non-disclosure: Up to 100% of the unpaid tax as a penalty, plus potential criminal prosecution

What You Should Do Now

If you are a company director and have not been filing Self Assessment returns, you should:

1. Register for Self Assessment with HMRC immediately (if not already registered)
2. Review your company's payroll records for the current and previous tax years
3. Collate details of all dividends received from your company
4. Review your director's loan account position
5. Obtain P11D information from your company's payroll provider

Expat UK Tax manages Self Assessment compliance for directors across the UK and internationally. Contact us to discuss your position.