HMRC’s proposed new data reporting requirements for owner-managed businesses and the self-employed

HMRC have recently announced new data reporting requirements for both employers and individuals. Change to data HMRC collects from customers.

The new requirements are expected to apply in respect of the 2025/2026 tax year and onwards. The precise process and exact data required will become clearer in due course but even at the stage of this announcement there are already clear considerations for employers and individuals.

HMRC will be looking for the following information to be included on the appropriate returns.

• Shareholders in owner managed businesses (OMBs): Dividends paid to shareholders in owner-managed businesses to be declared on self-assessment tax returns along with details of their percentage shareholding.
• Self-employed: Start and end dates of self-employment to be declared on self-assessment tax returns.
• Employers: Employee hours worked on Real Time Information (RTI) payroll returns.

Background

HMRC’s stated policy objectives behind the change are to improve the quality of data they collect, provide a better experience to taxpayers and improve compliance. However, obtain more data to be harvested in HMRC’s Connect — supercomputer is a continuation of the government and HMRC pathways focusing on obtaining a rich profile picture of taxpayers, enabling them to use big data and smarter systems to focus on perceived tax avoidance and abuse. HMRC resources are stretched and leaning on technology and data to identify higher risk cases to review is a logical response, even though it does come with an additional compliance cost for both business owners and the self-employed.

Suggested next steps

While the changes in reporting are expected to come into force from April 2025, there are aspects to consider now.

Employers / owner managers

The reporting of hours worked will enable HMRC to use systems to target and focus on national minimum wage compliance and related living wage considerations. New systems and processes may need to be introduced to collect and validate the information required. This could include adjustments to HR administration and payroll systems.

In advance of HMRC’s implementation date, employers would be wise to consider their current compliance with the rules and simulate how this may change, or require change, ahead of the new reporting requirements.

The reporting of self-employed start and end dates by the self-employed and dividend information by shareholders in OMBs could in theory have implications for employer compliance to, as the data can be used to provide a richer picture on off payroll worker compliance.

Self-employed

The reporting of start and end dates for self-employments will enhance HMRC’s ability to use systems to target cases where the self-employment could, in their opinion, be an employment instead. Employed vs self-employed is a complex area to look at but the longevity for self-employments can be a key data point.

Self-employed individuals should consider how the reporting of start and end dates could impact their compliance position or exposure to further scrutiny.

Crowe have a dedicated Workforce Advisory team that can support businesses in all the above areas. Please do get in touch with Dinesh Jangra, or your usual Crowe contact.