Could charity trustees be caught by the new close company director reporting requirements?

Although the new self assessment reporting requirements may appear straightforward, charitable companies are one area where they could easily be overlooked. A quick review now could help avoid tax return filing issues and penalties later.

What has changed?

A change to the 2025-26 self assessment tax return is creating unexpected issues for some taxpayers.

Directors of close companies must now provide additional information on their tax returns, including the company registration number and details of their shareholding. At first glance, this may seem relevant only to owner-managed businesses. However, there is a potential trap for charity trustees and members of charitable companies.

Why could charitable companies be affected?

Many charities operate through companies limited by guarantee rather than companies with share capital. It is easy to assume that these organisations fall outside the new reporting requirements because there are no shares to own.

However, a company limited by guarantee can still be a close company. The tax definition of a participator is also wider than share ownership. It can include voting rights and other interests in a company. As a result, trustees or directors of some charitable companies may need to consider whether the new disclosures apply to them.

Even where there are no shares, a company limited by guarantee may still be a close company and the reporting requirement may still apply. HMRC’s guidance is that, in these circumstances, the shareholding percentage should generally be entered as 0%, together with the company’s registration number.

Why is there a risk of getting this wrong?

The risk is that the issue may be overlooked. Many trustees do not think of themselves as directors of a close company. Tax return preparers may also not have ready access to the information needed to complete the return, particularly where they do not act for the charity itself.

What are the penalties?

It is important to get this right. A new penalty of £60 applies for each failure to provide the additional information requested. It will apply to self assessment tax returns from 2025-26 and may be charged on individual, trust and partnership returns.

You must not leave any of boxes 7.1 to 7.4 on page SA102 blank. If a box does not apply, enter ‘nil’. You must also complete a separate SA102 page for each directorship you hold, even if the role is unpaid. Otherwise, HMRC may treat this as a failure to provide the required information and charge a penalty.

Practical points to consider

• Review any directorships you hold, including charities and not-for-profit organisations
• Do not assume a company limited by guarantee falls outside the close company rules
• Obtain the company registration number and keep a record of it
• Check whether the organisation is a close company and whether the additional disclosures apply

How we can help

If you are concerned that these rules may apply to you and would like help understanding your position, including whether the close company rules apply, please speak to your usual PKF Francis Clark adviser.