HMRC Form CT61 is a crucial document used by companies and organisations in the United Kingdom to report certain types of payments and to pay the Income Tax collected from these payments to HM Revenue & Customs (HMRC). The form is typically used when a company or organisation pays interest, royalties, alternative finance payments, manufactured payments, relevant distributions, or any similar recurring payment.
If an enterprise makes payments like interest, royalties, finance bills, payments for manufactured payments, and relevant distributions, it should typically make those payments after deducting income tax at source, at the primary charge - presently 20%. It needs to inform HMRC about these bills and pay the income tax that it has collected through these payments.
In short, the CT61 form is used to report the amount of tax that has been deducted from these payments and to pay this amount to the HMRC. It must be completed and submitted on a quarterly basis, even if no payments have been made during that period unless you are an LLP (Limited Liability Partnership).
When completing the CT61 form, companies must provide details of the payments they have made during the period in question, including the amount of tax that has been deducted. They must also provide details of the recipients of the payments, including their name and address, and their Unique Taxpayer Reference (UTR) number if they have one.
The CT61 form is a document that companies must complete and submit to the HMRC when they make certain payments that are subject to the Income Tax on Company Payments.
These payments include:
Interest on loans
Royalties
Annuities
Income from purchased life annuities
Patent income
Income from the use of intellectual property
Payments made under certain contracts for the use of land
Certain payments for the use of movable property
The Income Tax on Company Payments is levied at a rate of 20%. This means that companies must deduct 20% from the payments they make to the recipients and pay this amount to the HMRC. The CT61 form is used to report the amount of tax that has been deducted and to pay this amount to the HMRC.
The Purpose of Form CT61
Companies are generally required to make these payments after deducting Income Tax at the basic rate, which is currently 20%. The deducted tax is then paid to HMRC using Form CT61. However, it's important to note that limited liability partnerships (LLPs) do not use Form CT61. Instead, LLPs must send a letter to HMRC detailing the payment made and the tax deducted.
The Return Period
Each return relates to a return period, which is usually a three-month period. At the end of each return period, companies send in a CT61 Return showing their payments for that period. Return periods are fixed by law. If tax is shown in box 22 of the form, the company must pay it, without demand, within 14 days after the end of the return period.
Special Cases
There are some special cases where companies do not need to deduct basic rate tax. These include donations to charities, interest on quoted Eurobonds, and payments made by a company to another company that is resident in the UK or is carrying on a trade in the UK and is chargeable to UK Corporation Tax on this income.
Completing CT61
Companies cannot download Form CT61 but can request it online through the HMRC website. If a company is an LLP, it must send a letter to HMRC stating that it is an LLP and quote its Unique Taxpayer reference with details of the payment made and the tax deducted.
You can request FormCT61 by completing an online form here.
Agents can request FormCT61 by completing an online form here.
The CT61 form must be completed and submitted to the HMRC on a quarterly basis, even if no payments have been made during that period. The deadlines for submitting the form and paying the tax are:
14th April 2023 for the period ending 31st March 2023
14th July 2023 for the period ending 30th June 2023
14th October 2023 for the period ending 30th September 2023
14th January 2024 for the period ending 31st December 2023
When completing the CT61 form, companies will need to provide details of the payments they have made during the period in question, as well as the amount of tax that has been deducted. They will also need to provide details of the recipients of the payments, including their name and address, and their Unique Taxpayer Reference (UTR) number if they have one.
The CT61 form must be completed accurately and submitted on time to avoid penalties and interest charges. If a company fails to submit the form or pay the tax on time, it may be liable to penalties and interest charges. The penalties for late submission and payment are:
£100 for the first late submission
£200 for the second late submission
£300 or 5% of the tax due, whichever is greater, for the third and subsequent late submissions. Interest will also be charged on any tax that is paid late.
In addition to the CT61 form, companies may also be required to complete other forms and returns relating to their tax affairs. For example, they may need to complete a Corporation Tax return if they are liable to pay Corporation Tax on their profits. They may also need to complete a VAT return if they are registered for Value Added Tax (VAT).
Thus CT61 form is an important document that companies must complete and submit to the HMRC when they make certain payments that are subject to the Income Tax on Company Payments. This tax is levied at a rate of 20%, and the CT61 form is used to report and pay this tax. Companies must ensure that they complete the form accurately and submit it on time to avoid penalties and interest charges.
Instructions to Fill the CT61 Form
Filling out the CT61 form is a crucial process for UK-based companies and businesses, as it pertains to the taxation of certain types of income, including interest payments. This detailed guide is designed to help UK taxpayers, especially business owners and accountants, understand and accurately complete the CT61 form.
Understanding the CT61 Form
The CT61 form is used by companies to report and pay Income Tax on interest, alternative finance payments, and other annual payments from which tax must be deducted. It's important to note that not all companies are required to submit a CT61 Return. The necessity to file this return depends on specific circumstances, such as if the company has deducted tax from annual payments or interest it has paid.
Determining the Return Period
The CT61 Return is usually required for each three-month period, ending on the last day of March, June, September, and December. The return periods are fixed by law and must be strictly adhered to when filing the return. For companies with accounting periods that do not align with these quarter dates, the three-month period is split into two return periods.
When to Submit the CT61 Return
Companies are required to submit a CT61 Return and pay any tax due within 14 days after the end of the return period. Failing to submit the return on time can result in penalties and interest charges.
Sections of the CT61 Form
Part 1: Tax on Annual Payments and Interest
This section is for reporting tax deducted from annual payments and interest. Companies must include details of the payments made and the tax deducted.
Part 2: Tax on Manufactured Interest
If a company has received 'manufactured' interest from abroad, it must be reported in this section, along with any tax deducted.
Part 3: Tax on Relevant Distributions
This section is for reporting tax deducted from relevant distributions.
Part 5: Set-off and Repayments
If a company has received annual payments, interest, or alternative finance receipts from which Income Tax has already been deducted, this section allows them to set off this tax against the Income Tax the company must pay.
Specific Instructions for Completion
Annual Payments and Interest: Enter the total amount of annual payments and interest from which tax has been deducted.
Manufactured Interest: Include details of any manufactured interest received from non-residents.
Relevant Distributions: Report any relevant distributions from which tax has been deducted.
Calculation of Tax: Calculate the total tax due by applying the basic rate of Income Tax (20% as of the document's last update) to the total amount of payments made.
Set-off and Repayments: If applicable, include any tax that can be set off against payments made or request a repayment for excess tax deducted.
Special Considerations
Payments to Non-Residents: Interest and royalties paid to non-residents might be subject to reduced tax rates under double taxation treaties. Proper documentation from HM Revenue & Customs is required for these cases.
Building Societies: Special quarterly dates apply for building societies, and these must be adhered to when reporting.
Exceptions for Certain Payments: Some payments, such as donations to charities or interest on quoted Eurobonds, do not require tax deduction. Ensure these exceptions are correctly identified and reported.
Final Checks and Submission
Before submitting the CT61 form, double-check all entries for accuracy. Ensure that the form corresponds to the right return period and that all necessary sections are correctly filled out. Once completed, submit the form to the HM Revenue & Customs office along with any tax due.
Updates on HMRC Form CT61 and Corporate Tax in 2024
In 2024, there have been several updates related to HMRC Form CT61 and Corporate Tax in the United Kingdom. It's essential for businesses, accountants, and tax professionals to stay informed about these changes to ensure compliance with the tax laws and regulations.
1. Introduction of New Tax Band:
The UK has introduced a new tax band called the Advanced Rate. This addition is part of HMRC's ongoing efforts to modernize and simplify the tax system. Businesses should be aware of how this new tax band might affect their tax calculations and obligations.
2. Mandatory Payrolling of Benefits In Kind (BIKs):
From April 2026, it will be mandatory for businesses to payroll all Benefits In Kind (BIKs). This requirement aims to streamline the process of reporting and paying Income Tax and Class 1A National Insurance Contributions. The introduction of mandatory payrolling will eliminate the need for submitting form P11D for BIKs, although Class 1A NICs will still need reporting.
3. Changes in National Insurance Credits for Parents:
Legislation will be introduced to allow parents and carers to apply for National Insurance (NI) credits for tax years where they did not claim Child Benefit. This change ensures the preservation of State Pension entitlement by adding qualifying years of NI. Transitional arrangements will be in place to accommodate those affected since 2013.
4. Tax Simplification for Alternative Finance Arrangements:
HMRC has published a consultation proposing changes to the Capital Gains Tax (CGT) rules that apply to alternative finance arrangements. These amendments aim to ensure that the CGT outcome is consistent whether alternative or conventional finance is used.
5. Online Service for Employees' Tax Relief Claims:
A new online service is being developed for employees to claim tax relief on all of their expenses in one place. This service is intended to simplify the claim process for many employees and enable HMRC to automatically process claims.
6. Reforms to Transfer Pricing, Permanent Establishments, and Diverted Profits Tax:
HMRC is working on developing simpler, shorter legislation for transfer pricing, permanent establishment, and Diverted Profits Tax. This initiative aims to create a tax system that is easier to understand and administer.
Completing the CT61 Form in 2024
Who Needs to Complete the CT61 Form?
Businesses, organizations, and individuals making payments subject to tax deduction at source must complete the CT61 form. This includes annual interest, royalties, annuities, and other relevant annual payments.
Filing Frequency and Deadlines:
The CT61 form must be completed and submitted on a quarterly basis, even if no payments have been made during that period. The deadlines for submitting the form and paying the tax are usually within 14 days after the end of each quarter.
Form Completion and Submission:
When completing the CT61 form, businesses need to provide details of the payments made, the amount of tax deducted, and information about the recipients of the payments. The form must be submitted accurately and on time to avoid penalties and interest charges.
Penalties for Late Submission:
Failing to submit the CT61 form or pay the tax on time can result in significant penalties, starting from £100 for the first late submission and increasing for subsequent late submissions.
Electronic Submission:
Businesses have the option to submit the CT61 form electronically using HMRC’s online services, providing a convenient and efficient way to fulfill this obligation.
Record Retention:
Businesses should retain records related to the CT61 form for a minimum of six years, including copies of completed forms, supporting documents, and correspondence with HMRC.
The updates to HMRC Form CT61 and Corporate Tax in 2024 reflect HMRC's commitment to modernizing the UK tax system. Understanding these changes is crucial for businesses to ensure compliance and efficient handling of tax obligations. Regularly consulting HMRC guidelines and seeking professional assistance when necessary can aid businesses in navigating these changes effectively.
Completing the CT61 form accurately is vital for compliance with UK tax laws. Understanding the form’s sections, accurately reporting all relevant payments, and adhering to the submission deadlines are key to ensuring proper tax practices for UK businesses. Always refer to the latest guidelines from HM Revenue & Customs for any updates or changes in the tax laws.
How Can a Tax Accountant Help You Manage Your Company's Corporate Tax?
Managing corporate tax can be a complex and time-consuming task for businesses. It involves understanding intricate tax laws, filing accurate returns, and planning for future tax liabilities. This is where a tax accountant comes into play. A tax accountant is a professional who specialises in managing tax affairs and can provide invaluable assistance in navigating the labyrinth of corporate tax.
Understanding Tax Laws
One of the primary roles of a tax accountant is to understand and interpret tax laws. The UK tax system is complex, with frequent changes and updates to legislation. A tax accountant stays abreast of these changes and ensures your company complies with all relevant laws. They can explain these laws in simple terms, helping you understand your company's tax obligations and potential liabilities.
Accurate Tax Filing
Filing corporate tax returns can be a daunting task. It involves collating financial data, calculating tax liabilities, and submitting the necessary documentation to HMRC. A tax accountant can streamline this process. They ensure that your tax returns are accurate, complete, and submitted on time, thereby avoiding penalties for late or incorrect submissions.
Tax Planning and Strategy
A tax accountant can also assist with tax planning and strategy. This involves analysing your company's financial situation and planning for future tax liabilities. They can advise on strategies to minimise tax liabilities, such as making use of allowances, deductions, reliefs, and exemptions. This proactive approach to tax management can result in significant savings for your company.
Dealing with HMRC
Interactions with HMRC can be challenging and stressful. Whether it's responding to an enquiry, negotiating a payment plan, or dealing with a tax investigation, a tax accountant can act as an intermediary between your company and HMRC. They can handle communications, negotiate on your behalf, and ensure that your company's interests are protected.
Audit Support
If your company is subject to a tax audit, a tax accountant can provide invaluable support. They can help prepare for the audit, liaise with the auditors, and respond to any queries or issues that arise. Their expertise can help ensure that the audit process goes smoothly and that any potential issues are addressed promptly and effectively.
Training and Advice
A tax accountant can also provide training and advice to your company's staff. They can help your finance team understand tax laws and regulations, improve their tax accounting skills, and ensure they are aware of the latest changes and developments in the tax world. This can enhance your company's internal tax management capabilities.
A tax accountant can provide a wide range of services to help manage your company's corporate tax. From understanding tax laws and filing accurate returns, to strategic tax planning and dealing with HMRC, their expertise can be invaluable. By hiring a tax accountant, you can ensure that your company's tax affairs are in safe hands, leaving you free to focus on running and growing your business.