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HMRC, is set to receive enhanced authority aimed at gathering additional information about dividend payments received by directors of owner managed businesses. Concurrently, employers will be have to report the specific hours worked by individual employees.

Starting from April 2025, there will be new rules regarding the disclosure of dividends. Individuals associated with owner managed businesses will need to use their self-assessment tax returns to segregate dividend income received from their own companies as opposed to other dividend income sources. Moreover, they’ll be required to specify their percentage ownership in these companies.

To facilitate this, HMRC will request detailed information through the SA102 form (the employment page of the tax return), encompassing dividend value and the individual’s shareholding percentage in closely held companies where they hold a directorship.

Proposed legislation outlines the implementation date as the tax year 2025-26. Employers will be obligated to provide comprehensive data about contracted employee hours through real-time PAYE reporting.

Furthermore, self-employed taxpayers will now need to provide information about the start and end dates of their self-employment when submitting their self-assessment tax returns.

It is worth noting that HMRC had to revise its original plans due to resistance from stakeholders during the initial consultation in 2022. Consequently, they dropped intentions to collect data regarding employee job titles, precise work locations, and geographic office/factory details. The specific nature of work undertaken by individual self-employed workers was also excluded.

Plans to delve deep into the sectoral activities of self-employed individuals were also discarded due to the potential burden of excessive information collection in an already challenging business environment.

Stakeholders underscored that HMRC already possesses substantial data that could offer a comprehensive view of the self-employed sector. They questioned the rationale behind collecting additional data unless it had applications beyond the tax domain.

The government’s response to this feedback shows a balanced and proportionate approach to data collection. The focus will be on using existing customer data, while exploring additional data collection only when justifiable and feasible.

Non-compliance with these regulations could lead to a £60 penalty.

In summary, the proposed changes encompass a broader scope of data collection by HMRC, with significant revisions made following stakeholder input. The underlying intention remains enhancing compliance and curbing tax evasion. You can read more about the draft legislation in the link below.

Draft legislation, Changes to HMRC data collection

If you would like further advice on the implications of this legislation on your business, please do get in touch with our team at CB Reid.