Here’s what we know so far.

Currently, directors completing a Self-Assessment tax return are simply asked whether they were a director during the tax year and whether the company was a close company (typically a company controlled by a small number of shareholders).

Under the new rules, directors will also need to provide additional details, including:

• Dividend income received from their company
• Their percentage shareholding
• Information relating to each directorship they hold

While that sounds straightforward, the practicalities are proving less so.

Every Directorship Could Need to Be Reported Separately

One of the biggest changes concerns how HMRC expects directors to complete their tax return.

At present, many directors only provide employment-style information where they have received a salary or benefits from a company.

HMRC’s current interpretation of the new rules appears to be different. It expects directors to provide details for every directorship they hold, even if:

• They received no salary
• They received no benefits
• They received no dividends

In other words, being a director alone may be enough to trigger the reporting requirement.

For business owners with multiple companies, this could significantly increase the amount of information that needs to be included on their tax return.

Dormant Companies Are Not Exempt

If you are a director of a dormant company, you might assume there’s nothing to report.

Unfortunately, that’s not HMRC’s view.

Even where a company has had no trading activity and the director has received no income, HMRC has confirmed that the new reporting requirements will still apply.

This creates a potential challenge. Many business owners forget about dormant companies that have been sitting inactive for years. If those directorships are missed when completing a tax return, there is a risk of reporting errors and possible penalties.

What About Penalties?

There is some good news.

Early concerns suggested that multiple penalties could arise where information was missing for several companies. HMRC’s current position is that the new requirements should be treated as a single obligation.

That means only one £60 penalty should apply per tax return, regardless of:

• How many directorships are involved
• How many companies are involved
• How many pieces of information are missing

Shareholdings Could Become Complicated

The new rules also require directors to report their percentage shareholding in close companies.

That may sound simple if you own all the shares in your business. However, things become more complicated where there are:

• Different classes of shares
• Multiple shareholders
• Family-owned companies
• More complex ownership structures

Calculating shareholdings based on the nominal value of shares may not always be straightforward, and further clarification from HMRC is still being sought.

What Should Directors Do Now?

There is no immediate action required, but it would be sensible to start keeping a complete record of:

• All company directorships you hold
• Any dormant companies where you remain a director
• Your shareholdings in each company
• Dividends received during the year

Having this information readily available should make the transition much smoother when the new reporting requirements take effect.