New disclosure requirements for business owners: what to expect from 2025/26

For many business owners, completing a Self Assessment tax return has traditionally been about getting the figures right. From April 2025, that will no longer be enough.

HMRC is placing far greater emphasis on the detail that sits behind those figures. In practical terms, this means more questions, more precise reporting and less flexibility where information is incomplete. Even where the final tax position remains unchanged, missing or inaccurate disclosures could still lead to penalties.

If you run your own business or act as a director of a close company, these changes are worth addressing now rather than leaving them until filing season.

Two areas are seeing increased scrutiny. The first is the requirement to report exact start and end dates for unincorporated businesses. The second, and more significant for many, is the expanded disclosure expected from directors of close companies.

Neither requirement is entirely new. What has changed is the level of detail expected and HMRC’s growing focus on completeness.

On the surface, identifying when a business starts or stops may seem clear-cut. In practice, it is rarely that simple.

Many businesses evolve over time. What begins as a side project may generate occasional income before developing into a commercial venture. In other cases, trading activity may begin informally before formal registration takes place. The transition from hobby to business is often gradual rather than defined by a single date.

The same challenges apply when a business comes to an end. Activity tends to taper off, with work concluding and final payments being received over a period of time. Establishing the point at which trading has truly ceased can be difficult.

Historically, there has been some flexibility in how these situations are reported. From 6 April 2025, HMRC expects a clear and supportable position to be taken. This places greater importance on documenting when a trade genuinely begins and ends.

Where possible, this should be supported by evidence such as initial invoices, signed contracts, marketing activity or the point at which there was a clear intention to trade commercially. Without this, it can be far more difficult to justify a position retrospectively.

The more notable change for many will be the new reporting requirements for directors of close companies. Broadly, this applies to most owner-managed and family businesses.

From the 2025/26 tax year, directors will need to include additional information within their personal tax returns. This includes the company name and registered number, details of dividends received from that company, including where no dividends have been paid, and the highest percentage shareholding held during the year.

It is this final requirement that often requires closer consideration.

Shareholdings are not always static. Ownership can shift during the year due to share issues, family transfers, restructuring or succession planning. Identifying the highest percentage held at any point requires more than a simple year-end review.

In practice, this means maintaining a clear record of any changes in ownership throughout the year. Where movements have taken place, it is important to understand how these would be reflected if the peak position needed to be disclosed.

These additional requirements give HMRC greater visibility over how profits are distributed and how control is structured within a business. They also make it easier to compare information reported at company level with personal tax returns.

Alongside these changes, HMRC is introducing fixed penalties for missing information. A £60 charge can apply for each omission, regardless of whether the underlying tax has been calculated correctly.

This marks a shift in focus. Previously, errors tended to matter most where tax was underpaid. Now, the completeness of the return carries its own weight.

It is easy to see how multiple omissions could arise. Missing a shareholding detail, failing to disclose a nil dividend position, or not including a business cessation date could each trigger a separate penalty.

The expectation is not perfection, but that reasonable care is taken when providing the information requested.

For most businesses, day-to-day activity will not change. What will change is the discipline required around record keeping and documentation.

If you are a sole trader or partner, it is worth recording when a new activity moves beyond an initial idea and begins to generate commercial income. While this may feel unnecessary at the time, it provides valuable evidence if the position is ever questioned.

For company directors, the focus should be on maintaining accurate records of shareholdings and dividend decisions throughout the year. This includes tracking any changes and ensuring they are properly documented.

It is also important that personal and company records align. As HMRC continues to connect data sources, inconsistencies are more likely to be identified.

Although these changes take effect from the 2025/26 tax year, early preparation will put you in a far stronger position.

If there have been any recent changes to your business structure, shareholdings or dividend approach, it is worth reviewing these and ensuring the documentation is complete and up to date. Understanding how these changes would be reported is equally important.

For unincorporated businesses, developing a clear timeline of activity will make future reporting far more straightforward. Identifying when a new venture becomes commercial is significantly easier in real time than it is months later.

Taking a more structured approach now will help reduce the risk of penalties and ensure that future returns can be completed with confidence.

If you would like to understand how these changes will affect your personal or business tax position, Old Mill can help you prepare now. We can review your current record keeping, identify any gaps and ensure you have the right processes in place ahead of the 2025/26 tax year. Get in touch click here…