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From the end of the 2025/26 tax year, 5 April 2026, you must report your dividend income accurately as part of wider personal tax reforms.

Directors of close companies must disclose the company name, registration number, specific dividend amounts and their highest percentage shareholding on Self-Assessment returns.

Dividends from your own company must also be shown separately from other income.

Dividend tax rates for 2026/27

For the 2026/27 tax year, commencing 6 April 2026, two dividend tax rates will increase by two percentage points:

• Basic rate rises to 10.75 per cent
• Higher rate rises to 35.75 per cent

There is currently no increase for additional rate taxpayers, who will continue to pay dividend tax at a 39.35 per cent.

The annual dividend allowance also remains at £500 and applies to all rates.

Dividends continue to offer a tax advantage over salary in most cases, although the difference between the two is reducing.

Directors should review how profits are taken and consider whether the current mix of salary and dividends remains appropriate.

Who has to report dividend tax?

Dividend tax most commonly applies to shareholders and company directors.

Individuals receiving dividends outside of an ISA or pension over the £500 allowance threshold must report them to HMRC.

Anyone who receives more than £10,000 in dividends may be required to submit a Self-Assessment tax return.

Reviewing your position

If you have concerns about dividend taxation or wider financial pressures, we can review your tax position, explain the latest changes from HMRC and help you create a bespoke plan to meet your personal financial goals.

Looking to understand and protect your finances? Speak to our experts.

Directors and employees claiming work-from-home tax relief will no longer be able to claim it from the start of the new tax year – 6 April 2026.

Why is this relief being taken away?

The Chancellor announced the removal of the work-from-home relief as part of her latest Autumn Budget.

The main reasoning given for the abolition is that it will support the nation’s deficit reduction.

HMRC has also said that it no longer believes it is fit for purpose or easy to police.

Who could claim work-from-home relief?

Work-from-home relief has been utilised by homeworkers since the early 2000s, helping them offset some of the costs of heating, lighting, broadband and other home-office expenses required to complete their jobs.

The relief allowed employees and directors to claim a flat rate of £6 per week or a deduction for actual costs.

However, those who do not claim the flat fee were required to provide evidence of the exact costs, such as an invoice or bill.

Eligibility for the relief only applied to individuals who had no other choice but to work from home.

For instance, where the business did not have an office or the daily commute was not feasible. Individuals who simply preferred to work from home did not qualify.

Is there any relief still available for home workers?

The only remaining tax-free support will be reimbursements made directly by employers.

This applies only where the payments relate to demonstrated additional household costs and where the costs are incurred wholly, exclusively and necessarily for employment duties.

For anyone still claiming work-from-home relief, it is worth reviewing your position now to understand how this abolishment will impact your take-home pay.

Further administrative changes are on the cards for close companies, as the Government seeks to gain a better understanding of previously difficult-to-distinguish transactions.

Close companies – those companies controlled by five or fewer participators or by their directors if those directors are participators – may soon need to disclose details of transactions with participators in order to stay compliant.

A full definition of who qualifies as a participator can be found in CTM60107, but they will generally be shareholders or directors.

A business is controlled by a participator when the participator has voting power, share capital of the company and rights to capital on winding up.

It is worth understanding which transactions may be impacted and how this could change reporting requirements.

Which reporting requirements might change?

The proposed changes will cover a range of transactions, including:

• Cash withdrawals
• Loans
• Debts
• Dividends
• Other distributions and transfers of assets to and from the company

It will exclude items that are already reported to HMRC, meaning that the changes will not result in a doubling up of administrative tasks.

To comply with the changes, close companies must provide details concerning the amount transacted, the date and the details of the recipient, including their name, address and national insurance number.

Why are these changes being introduced?

There is no guarantee that these changes will be introduced, as they are currently under public consultation.

However, there is a belief that transactions between close companies and their participators may be an area that is vulnerable to tax loss due to high levels of error and fraud.

Small businesses are seen as being particularly vulnerable to the tax gap, i.e. the difference between the amount of tax owed and the amount collected. They continue to be the focus of scrutiny and tax reform.

As these proposals are still under consultation, there is no clear indication of how and when the reports will need to be made.

The anticipated implementation will see the establishment of an annual reporting cycle that will be tied to the existing company tax return.

This should mean that the obligations will be easier to track, as they will not be an additional requirement.

Our team can help you understand your obligations and keep you updated on the outcome of the consultation.

Speak to our team to take the stress out of company tax compliance.