The self assessment tax return is set to get even bigger!
From the next tax year (2025/26), self-assessment tax returns will require more mandatory information. Some currently voluntary information will become compulsory, and new requirements will be added.
Two groups of people will be affected by the changes:
- taxpayers who start or cease to trade; and
- directors of close companies.
It’s estimated this will impact 1.2 million taxpayers carrying on a trade.
A close company is a UK-based, privately owned company that, as defined by the Corporation Tax Act 2010, is:
- under the control of 5 or fewer participators, or
- under the control of participators who are also directors, or
- company where more than half the assets of which would be distributed to five or fewer participators, or to participators who are directors, in the event of the winding up of the company.
The term ‘close’ reflects the close control of the company by a small number of people. The new tax return requirements are estimated to affect 900,000 company directors.
New Self Assessment Tax Return Information
- Starting or Ceasing Trading
When someone starts or ceases trading, the relevant date must be reported in the tax return for that tax year. This question already exists in the self assessment tax return, and answering it is voluntary. However, from 2025/26, it will be mandatory.
Close Company Directors
From 5 April 2025, it will be mandatory to disclose whether the taxpayer is a company director of a close company. This is currently a voluntary question. In addition, new information will be required:
- the name and registered number of the close company.
- the value of dividends received from the close company for the year. The dividends will be declared separately from other UK dividends, and
- their percentage shareholding in the company during the year. If the percentage shareholding changes during the year, the person should record the highest percentage shareholding.
Next Steps
‘It’s always been important to maintain accurate, up-to-date trading information,’ says Emily Bridges, tax expert and Chartered Accountant at re:accounts in Stevenage. ‘The changes add an extra layer to reporting requirements. If you’re affected by the changes, there’s time to prepare before the additional details must be submitted. As with all tax return information, it doesn’t have to be a last-minute rush!’
Are you impacted by the new mandatory questions?
Would you like to minimise your tax payments?
Talk to the friendly team at re:accounts. Saving money for our clients is our superpower! Arrange an initial chat without any obligation or stuffy accountancy jargon. Let’s talk.
