Charity and CIC directors spared new tax return reporting burden
A significant new reporting requirement is being introduced for directors from the 2025/26 tax year. HMRC is requiring directors who already complete a Self Assessment tax return to provide additional information about any close companies they are involved with, including details of directorships, shareholdings and dividend income.
HMRC has recently clarified that these requirements apply more widely than many advisers expected. In particular, they apply to directors of dormant close companies and, in most cases, directors who receive no salary, remuneration or dividends from the company.
However, there is some welcome news for the charity and social enterprise sector.
Unpaid charity and CIC directors exempt
HMRC has confirmed that an unpaid director of a registered charity or Community Interest Company (CIC) does not need to complete the new close company reporting boxes provided they:
- Receive no salary or other employment income from the organisation.
- Receive no dividends or other distributions.
- Have no entitlement to receive such income.
This clarification will come as a relief to many volunteer directors and trustees involved in purpose-driven organisations.
What about other directors?
For directors of owner-managed businesses and other close companies, the new rules will still apply even if:
- The company is dormant.
- No salary is paid.
- No dividends are received.
HMRC has also confirmed that where the return asks for dividend income or shareholding information, a value of £0 may need to be entered rather than leaving boxes blank.
Do all directors need to file a tax return now?
No. The changes only affect individuals who are already required to complete a Self Assessment tax return. HMRC has confirmed that directors who are not currently within Self Assessment do not need to register simply to provide this additional information.
Need advice?
Green Accountancy is already reviewing these changes as part of our personal tax return process. If you’d like to discuss how the new rules affect your circumstances, contact your usual Green Accountancy adviser.