HMRC introduced the rules in April to collect more data on business owners as part of its mission to close the tax gap. Small businesses account for 62pc of the UK’s £59.2bn in uncollected tax.
But the ATT said HMRC’s published guidance on the rules could cause confusion for business owners. In its notes accompanying the 2025-26 tax return, HMRC said taxpayers needed to fill in the Employment pages if they “received income as a company director”. But separately, it has said that company directors must fill in the pages even if they received no income that year.
HMRC said it is updating this guidance.
In addition, there are concerns the change could lead to business owners not declaring income by mistake.
As a result of the new rules, directors must report the dividends they received from the company in the Employment pages while still declaring their total dividend income elsewhere in the tax return.
Ms Rawson said this could cause confusion. “We worry people will accidentally not declare dividend income.”
She added: “It would seem really unfair to penalise people for not declaring income by mistake.”
Even if they received no dividend income from their company in 2025-26, business owners are expected to declare £0 in dividends rather than leaving the box blank or risk getting penalised.
Mr Etherington said: “It’s easy to assume there’s nothing to disclose because a company is dormant or no income was received from the company, but that may not be the case.”
John Hood, of accountancy firm Moore Kingston Smith, said: “The new reporting requirements for directors and shareholders place an extra burden on taxpayers at a time when compliance costs are already at a record high.
“It is not even clear that this latest demand will recover more tax for HMRC or is simply about data collection.”
The new form comes just before Making Tax Digital’s first deadline looms.
The policy compels around 864,000 landlords and self-employed workers to report their income and expenses to HMRC four times a year for each self-employment or property income source – plus an annual self-assessment – via HMRC-approved third-party software.
The first digital filing deadline for those with an annual turnover of more than £50,000 is Aug 7.
A spokesman for HMRC said: “These changes will improve our understanding of how directors are paid so we can better support them with their tax affairs. We’ve engaged extensively with stakeholders since we started consulting on the changes three years ago and we’re updating our guidance to help directors get things right.
“We’ll be taking a considered approach to directors who’ve made reasonable efforts to meet their obligations.”
