Company Tax Return - CT600 Explained

If you're running a limited company in the UK, one of your key legal responsibility is to submit a company tax return. This return is essentially how your company shares its income, expenses, and Corporation Tax details with HMRC.

The official name for this return is the CT600 form. It covers everything from your company’s profits and tax calculations to any allowances or reliefs you might be claiming. HMRC relies on the information provided in this form to determine how much Corporation Tax your company needs to pay.

Filing a company tax return is a legal obligation for all active limited companies, even if your business hasn’t made a profit or doesn’t owe any tax. If you miss the deadline or submit incorrect information, you could face penalties, interest charges, and a whole lot of unnecessary stress down the line.

That’s why it’s crucial for business owners and directors to understand what is company tax return, what is CT600, what it includes, and when it needs to be submitted. Getting this aspect of your business administration right not only helps you steer clear of issues with HMRC but also keeps your company in good standing.

A company tax return is essentially a report that limited companies send to HMRC to detail how much Corporation Tax they owe. It provides a comprehensive overview of your company’s income, expenses, profits, and tax calculations for a specific accounting period.

The official form for submitting this report is known as the CT600. This structured form requests key figures from your company accounts, including profit before tax, any reliefs or allowances, and the final Corporation Tax calculation. HMRC relies on this form to ensure that your tax has been calculated accurately.

The primary purpose of the CT600 is to inform HMRC about your company’s financial performance and the amount of tax it needs to pay. Even if your company didn’t make a profit or doesn’t owe any tax, you might still be required to file a return to remain compliant.

If you operate a limited company that’s active; meaning it’s trading or generating income, you must file a company tax return. Some unincorporated associations, like clubs and societies, may also need to submit a CT600 if they have taxable profits.

So, if your company is registered with Companies House and has engaged in any business activities, you’ll likely need to submit this return annually.

The CT600 form don't just show profits; it also provides a detailed breakdown of how those profits are calculated, including any tax reliefs or adjustments that might apply.

1. Company Details

At the start of the form, you’ll be asked to provide your company’s basic information. This includes:

• Company name
• Company registration number
• Corporation Tax reference number (UTR)
• Accounting period start and end dates

These details help HMRC match your tax return to your business records.

2. Income Information

The CT600 asks for your company’s total income for the accounting period. This section covers:

• Trading income – money made from selling products or services
• Interest received – income from bank interest or investments
• Rental income – if your company owns and lets out property
• Other income – any additional earnings not listed above

You’ll need to include all taxable income your company has received during the financial year.

3. Allowable Expenses and Deductions

Companies can deduct certain allowable expenses from their income before working out their Corporation Tax bill. The CT600 includes a section where you can report:

• Business running costs – like rent, salaries, and office supplies
• Depreciation adjustments (added back for tax purposes)
• Interest paid on business loans
• Professional fees – like accountancy or legal fees
• Marketing and advertising costs

These expenses help reduce the profit your tax is based on.

4. Capital Allowances

If your business has bought items like machinery, computers, or office equipment, you may be able to claim capital allowances. The CT600 includes a section where you can:

• List qualifying assets
• Show the value you’re claiming for tax relief

This can lower your taxable profit.

5. Taxable Profit Calculation

After adding up income and subtracting allowable expenses and capital allowances, the CT600 helps you work out your taxable profits. This is the amount your Corporation Tax is based on.

6. Corporation Tax Calculation

Using the taxable profit figure, the CT600 works out the Corporation Tax owed for the financial year. From 1 April 2023, Corporation Tax rates in the UK vary depending on the level of your company’s profits:

• 19% for profits under £50,000
• 25% for profits over £250,000
• A marginal rate for profits between these amounts

The form applies the correct rate to your profits to calculate the final tax bill.

7. Tax Reliefs and Credits

If your business qualifies for specific reliefs, the CT600 has space to claim them. This might include:

• Research and Development (R&D) tax credits
• Creative industry tax reliefs
• Patent Box relief
• Loss relief (if your business made a loss that can be carried forward or back)

These reliefs can reduce your tax bill or even result in a repayment.

8. Payments and Overpayments

The CT600 includes a section to record:

• Any Corporation Tax already paid
• Any overpayments from previous years
• Amounts still owed to HMRC

This makes it easier to balance what you’ve already paid against what you still need to pay.

9. Loans to Directors (Section 455 Tax)

If your company has lent money to directors or shareholders, you might need to pay Section 455 tax. The CT600 asks for details of any loans outstanding at the end of the financial year and calculates any extra tax due on these amounts.

10. Additional Information and Supplementary Pages

The CT600 also allows for extra information where needed. Some companies might need to attach:

• Supplementary pages for certain claims or situations (like charities or property income)
• Detailed notes or calculations if required by HMRC

1. Trading Limited Companies

Every active limited company is required to submit a Company Tax Return to HMRC, regardless of whether it made a profit or incurred a loss during the financial year. So, what exactly qualifies as an active company?

It’s any business that engages in activities like:

• Selling goods or services
• Managing investments
• Earning interest
• Receiving other forms of income

Even if your company doesn’t owe any Corporation Tax, you still need to file the return to keep HMRC updated on your financial status.

2. Dormant Companies

If your company is currently dormant - meaning it hasn't been trading and has no income or expenses, you might think you can skip sending a Company Tax Return.

But there are times when HMRC may still request one. For instance:

• If your company was active earlier in the financial year before it went dormant
• If HMRC sends you a notice asking for a return

In these cases, you'll need to complete the form, even if there's nothing to report.

3. Companies Trading at a Loss

Some folks believe that if their business is running at a loss, they can skip filing a tax return. But that’s not true!

Even if a limited company is operating at a loss, it still needs to submit a Company Tax Return. This is crucial because you can carry those business losses forward or backward to help lower your tax bills in other years.

4. Property Investment Companies

If your company owns property and brings in rental income, it’s considered an active business for tax purposes. Therefore, you need to file a Company Tax Return to report that income and pay any taxes owed.

5. Companies That Have Received a Notice to Deliver a Tax Return

Even if you think your company doesn’t need to file a tax return, you must do it if HMRC sends you a notice requesting one. Ignoring that could result in penalties.

Filing your company tax return (CT600) can be quite a challenge, especially if your business is bustling with activity or if you're feeling a bit lost when it comes to the right tax rules. Even a tiny error can result in fines, delays, or added stress from HMRC.

If you're not feeling up to tackling it on your own or if you simply want some peace of mind, hiring a qualified limited company accountant is a wise choice.

A professional can:

• Take care of your CT600 from beginning to end
• Ensure your return is spot-on
• Assist you in claiming any reliefs you might be eligible for
• Submit everything on time to avoid late filing penalties
• Save you time

Book a free consultation with our accountant today and get the expert assistance you need for your company tax return.