New HMRC Tax Return Rule: Unpaid Directors Must Still Report Their Directorships
Many company directors assume that if they haven't taken a salary, dividends, or benefits from their company, there is little or nothing to report on their self-assessment tax return. However, HMRC has clarified that from the 2025/26 tax year, directors who are already required to file a self-assessment return must disclose details of their directorships, even where they have received no income from the company.
This change could catch many business owners and directors of dormant companies by surprise.
What Has Changed?
HMRC's latest guidance confirms that individuals who are required to submit a self-assessment tax return must provide details of each UK company directorship they hold.
Importantly, this requirement applies even if:
No salary was paid
No benefits were received
No dividends were taken
The company was dormant throughout the year
In most cases, a separate employment section should be completed for each directorship held during the tax year.
Do the Rules apply to all Company Directors?
No.
The new reporting requirements do not mean that every company director must register for self-assessment.
Instead, the rules apply to directors who are already required to submit a tax return for another reason, such as:
Receiving untaxed income
Being self-employed
Having significant investment income
Being required to file by HMRC
However, once a tax return is required, details of all relevant directorships must now be included.
What About Owner-Managed Businesses?
Many small limited companies will be classified as close companies, meaning they are controlled by a small number of shareholders, often the directors themselves.
For directors of close companies, additional information may need to be disclosed, including:
Dividends received from the company
Percentage shareholding
Other interests in the business
HMRC has indicated that these disclosures may still be required even where the amounts involved are zero.
Dormant Companies Are Not Exempt
One area that may cause confusion is dormant companies.
Many directors of dormant businesses assume there is nothing to report because no trading activity has taken place. However, HMRC has confirmed that the reporting requirements can still apply to dormant company directors where they are already completing a self-assessment return.
This means directors should carefully review all company appointments before submitting their return.
Are There Any Exceptions?
Yes.
An exemption exists for directors of:
Registered charities
Community Interest Companies (CICs)
This applies where the director did not receive, or become entitled to receive:
Employment income
Dividends
Other distributions
from either the organisation itself or a connected company.
Potential Filing Challenges
The new rules may prove particularly difficult for individuals who hold multiple directorships.
Some online tax filing systems place limits on the number of employment or directorship pages that can be completed. HMRC's guidance states that taxpayers should prioritise completing the available sections for employments or directorships involving income, benefits, or expenses.
Any remaining directorships should be disclosed within the additional information section of the tax return.
HMRC's Approach
Recognising that this is a new reporting requirement, HMRC has stated that it will take a "considered approach" to compliance while taxpayers, agents, and software providers adapt to the changes.
However, directors should not rely on this as an excuse for incomplete disclosures. Ensuring all directorships are correctly reported will help avoid unnecessary queries, penalties, or delays in processing returns.
What Should Directors Do Now?
If you are required to complete a self-assessment tax return for 2025/26, now is a good time to:
✔ Review all current and former directorships held during the tax year.
✔ Check whether any dormant company appointments need to be disclosed.
✔ Gather information on shareholdings and dividends received from close companies.
✔ Speak to your accountant if you are unsure which directorships must be reported.
Final Thoughts
The new reporting requirements represent a subtle but important change for company directors.
Even where no salary, dividends, or benefits have been received, HMRC may still expect details of a directorship to be included on a self-assessment tax return.
For directors of owner-managed and dormant companies, taking the time to review these obligations before the filing deadline could help prevent costly mistakes and ensure compliance with HMRC's latest guidance.
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