Guidance

Software Developers: updates to Corporation Tax guidance and forms

Use this guidance to create your products if you're a HMRC software developer or substitute form producer.

Only use this guide if you’re a software developer or substitute form producer.

CT600 forms versions 2 and 3

HMRC publishes all the forms currently in use on these pages and identifies them by the letter ‘P’ in Draft Corporation Tax forms: summary for software developers.

To help you prepare your changes, drafts of forms not yet published, identified by the letter ‘D’, will appear in the table as soon as HMRC prepares them. No substitute forms should be published or brought into use based on drafts. HMRC asks you to wait until they publish the final versions, identified by the letter ‘P’ in the table, before seeking substitute approval and publishing your version.

Changes following 2020 Spring Budget

As a result of the Chancellor’s 2020 Spring Budget some changes will be required to CT systems and processes. The main CT specific measures that may have an impact on IT systems and processes are summarised below.

Rates of Corporation Tax: CT main rate

As announced in Budget 2020 the Corporation Tax main rate will remain at 19% rather than reduce to 17% as previously planned. The charge to Corporation Tax and the main rate will also be set at 19% for the financial year beginning 1 April 2021.

The HMRC Corporation Tax online service will need to be updated with the revised rate of 19%. If a company has taxable profits, for an accounting period that ends after 1 April 2020, it should not submit its tax return until the system has been updated.

Company tax returns for accounting periods starting on or after 1 April 2020 with zero tax chargeable (nil returns) can still be submitted online, as the tax rate change has no impact.

Find out more about changes to Corporation Tax rates from 1 April 2020.

Increased Structures and Buildings Allowance

Businesses that incur qualifying expenditure on the construction, renovation or conversion of non-residential structures and buildings may claim Structures and Buildings Allowances (SBA) where all contracts for works were entered into on or after 29 October 2018. From 1 April 2020 for businesses that are subject to Corporation Tax, and 6 April 2020 for businesses subject to Income Tax, businesses will be entitled to claim an increased annual allowance of 3% per year on the qualifying expenditure incurred. Some miscellaneous amendments to the legislation are included to ensure it operates as intended.

No changes to the CT600 or CT600 guide are required.

Find out more about the increase in Structures and Buildings Allowance for capital allowances.

Banking Surcharge Rate Change

The bank Corporation Tax surcharge (Surcharge) is a charge of 8% on the profits of banks, payable in addition to Corporation Tax (CT). The Surcharge profits are calculated on the same basis as for CT, but with some reliefs denied. The current Surcharge legislation disregards the effect of elections to transfer allowable losses from a non-banking company to a bank where they are used to reduce future chargeable gains. However, this disregard does not extend to transfers of allowable losses used to reduce in-year chargeable gains. This measure addresses this inconsistency and ensures that Surcharge profits are not reduced by allowable losses surrendered by non-banking companies in the same group.

No changes will be made to the CT600.

Find out more about surcharge on banking companies for transferred-in losses.

Capital Allowances: CO2 emission thresholds for business cars and first year allowances for business cars, zero-emission goods vehicles and equipment for gas refuelling station

The measure extends the period for which the 100% first year (capital) allowances (FYAs) are available for this expenditure from April 2021 to April 2025. In conjunction with this, the measure also reduces the CO2 emission thresholds which are used to determine the rate of capital allowances available for business cars. This will also reduce the threshold for the lease rental restriction. These changes will also come into effect from April 2021

Legislation will be introduced to extend the 100% FYAs for low CO2 emission cars, zero-emission goods vehicles and equipment for gas refuelling stations by 4 years from April 2021.

Legislation will be introduced to reduce the CO2 emission thresholds from April 2021, which determine the rate of capital allowances available through which the capital expenditure for business cars can be written down. The thresholds will be reduced from 50g/km to 0g/km for the purpose of the FYA for low CO2 emission cars and from 110g/km to 50g/km for the purpose of WDAs for business cars.

This will mean that business cars acquired from April 2021 with CO2 emissions of 0g/km will be eligible for the FYA (100%) while those business cars with CO2 emissions not exceeding 50g/km will be eligible for WDAs at the main rate (18%) while such cars with CO2 emissions exceeding 50g/km will be eligible for WDAs at the special rate (6%). The new 50g/km threshold will also apply for determining the lease rental restriction for costs of hiring business cars for more than 45 consecutive days.

Changes will be made to the CT600 return form and the CT600 guide.

Find out more about capital allowance carbon dioxide emissions thresholds for business cars, goods vehicles and equipment for gas refuelling stations from April 2021.

Extend Enhanced Capital Allowances in Enterprise Zones

This measure ensures that the 100% first year capital allowance will remain available for expenditure incurred in relation to all areas, whenever designated, until at least 31 March 2021.

Enhanced first year allowances for investment in new plant or machinery within designated assisted areas within Enterprise Zones were introduced in 2012 and were initially available for investment over a 5-year period but this was later extended to 8 years. The period commences from when the area is treated as designated.

By 31 March 2020, 8 years will have elapsed since the introduction of these enhanced first year allowances. The government has announced at Budget March 2020 that these capital allowances will remain available for expenditure incurred in relation to all areas, whenever designated, until at least 31 March 2021.

No changes to the CT600 or CT600 guide are required.

Find out more about enhanced capital allowances in Enterprise zones.

Corporate Capital Loss Restriction

For accounting periods ending on or after 1 April 2020 companies making chargeable gains will only be able to offset up to 50% of those gains using carried-forward (allowable) capital losses.

A Corporate Income Loss Restriction (CILR) for carried-forward income losses was introduced in 2017 which included an allowance that the first £5 million of profits per group could be offset with carried-forward losses before the 50% restriction is applied. The deductions allowance can now also be set against chargeable gains.

This will ensure that over 99% of companies are unaffected by the restriction.

No changes to the CT600 are required. CT computation taxonomy changes have been made and the CT600 guide will be updated.

Find out more about changes to the Corporate Capital Loss Restriction for Corporation Tax from 1 April 2020.

Digital Services Tax

From 1 April 2020, the government will introduce a new 2% tax on the revenues of search engines, social media services and online marketplaces which derive value from UK users.

A single entity in the group will be responsible for reporting the Digital Services Tax to HMRC. Groups can nominate an entity to fulfil these responsibilities. Otherwise, the ultimate parent of the group will be responsible.

The Digital Services Tax will be payable and reportable on an annual basis. Digital service tax is returned and accounted for separately to Corporation Tax. See pay your Digital Services Tax and submit a Digital Services Tax return.

No changes to CT600 or CT600 guide are required. CT computation taxonomy changes have been made in relation to DST expenditure adjustments.

Find out more about Digital Services Tax.

Intangible Fixed Assets – Pre-FA2002 Assets

This measure removes a restriction that exists in relation to pre-FA 2002 intangible assets that prevents some companies from claiming relief for older, well-established intellectual property rights. This means that corporation tax relief will be available for the cost of acquiring these assets in circumstances where it wasn’t previously and that corporate intangible assets will now be relieved and taxed under a single regime for acquisitions from 1 July 2020.

The measure amends the corporate Intangible Fixed Assets regime (the IFA regime) to allow companies to claim corporation tax relief for pre-FA 2002 intangible fixed assets acquired from related parties from 1 July 2020.

A pre-FA2002 intangible fixed asset is an intangible asset that was created before 1 April 2002. The IFA regime only applies to companies.

No CT600 or CT600 guide changes are required. A taxonomy change will be made next year.

Find out more about Corporation Tax treatment of intangible fixed assets from 1 July 2020.

Losses on disposal of shares – abolition of requirement to be UK business

This measure widens the scope of the Income Tax and Corporation Tax share loss relief, so that it applies to shares in companies carrying on a business anywhere in the world and not just the UK. A change will be made to the reporting requirements so that HMRC can identify the tax residency of the company that issued the shares.

No changes to CT600 or CT600 guide are required. CT computation taxonomy changes have been made.

Find out more about share loss relief for Income Tax and Corporation Tax.

Non-UK resident companies carrying on UK property businesses

Following announcement at Autumn Statement 2016, the government consulted in March 2017 on options for bringing non-resident companies’ UK property income and gains (previously chargeable to Income Tax and non-resident Capital Gains Tax respectively) into Corporation Tax.

At Autumn Budget 2017, the government published a response document to the consultation and announced that it would make this change for UK property income in April 2020. Changes to the taxation of the UK property business or other UK property income of a non-UK resident company were enacted at section 17 and Schedule 5 to the Finance Act 2019 and come into force on 6 April 2020.

The changes introduced by this measure are designed to ensure that Finance Act 2019 rules, enacted to bring non-UK resident companies that carry on a UK property business or have other UK property income within the scope of Corporation Tax from 6 April 2020, work as intended.

The CT600 guide will be amended to reflect the regime. CT computation taxonomy changes have also been made.

Find out more about changes to Corporation Tax for non-UK resident companies with UK property income.

Off-payroll Working – extension of reform to private sector

The off-payroll working rules have been in place since 2000 to ensure fairness between individuals who work in a similar way. They are designed to make sure that an individual who works like an employee, but through their own limited company, pays broadly the same Income Tax and National Insurance contributions as other employees. The rules do not apply to the self-employed.

This measure will apply to engagements with medium or large-sized organisations in the private and third sectors. It will shift responsibility for operating the off-payroll working rules from the individual’s PSC, to the organisation or business that the individual is supplying their services to. This includes responsibility for deciding whether the rules should apply and deducting the associated employment taxes and National Insurance contributions.

The changes to the off-payroll rules for organisations in the private sector were due to come into effect on 6 April 2020. This has now been delayed until April 2021 because of the spread of the coronavirus (COVID-19) pandemic.

The delay is to help businesses and individuals deal with the economic impact of COVID-19. The delay to the introduction of the changes is not a cancellation. Archived documents will still reference April 2020 but the implementation of these rules have been deferred until April 2021.

CT computation taxonomy changes have been made.

Find out more about rules for off-payroll working.

Research and Development – increase rate of Expenditure Credit

This measure increases the tax relief for large companies (and sometimes small and medium size enterprises) that carry out qualifying R&D and claim Research and Development Expenditure Credit.

The Research and Development Expenditure Credit (also known as the ‘Above the Line’ credit) is a standalone credit that is brought into account as a receipt in calculating trading profits. The current general rate is set as 12% of qualifying R&D expenditure. This measure increases the rate of the Research and Development Expenditure Credit from 12% to 13%.

No changes to the CT600 or CT600 guide are required.

Find out more about the change to the rate of Research and Development Expenditure Credit.

Scope clarification of the rules for spreading transitional adjustments recognised on adoption of the lease accounting standard IFRS16

Finance Act 2019 introduced legislation requiring those businesses adopting IFRS 16 to spread the tax impact of any transitional lease accounting adjustment over the average remaining lease term. This measure makes minor amendments to the spreading rules to put beyond doubt that they apply to all lessees adopting the new accounting standard for any period of account.No changes to the CT600 or CT600 guide are required.

Find out more about Income Tax and Corporation Tax rules for spreading transitional adjustments on new lease accounting.

Limited Liability Partnerships and Tax Administration

This measure provides that in circumstances where an Limited Liability Partnerships has delivered a Limited Liability Partnership return on the basis of operating ‘with a view to profit’ and is subsequently found to be operating ‘without a view to profit’, HMRC can still amend the Limited Liability Partnerships members’ returns based on the Limited Liability Partnership return as originally submitted.

It is introduced with retrospective and prospective effect but does not introduce any additional obligations or liabilities for customers. It will ensure that all Limited Liability Partnership members are treated equally and fairly for taxation purposes under the law as they always have been.

No changes to the CT600 or CT600 guide are required.

Find out more about tax treatment of limited liability partnerships.

Identical tax returns

Accurate facsimiles of Company Tax Return forms (based on the final paper format) can be accepted providing they meet certain requirements. The output must replicate the HMRC version of the forms for layout, pagination and graphical elements.

Identical returns, supplementary pages and any other CT forms must be centrally approved by HMRC before they’re marketed or brought into use by contacting hmrc.substituteformsapproval@hmrc.gsi.gov.uk.

Draft versions of CT forms

HMRC provides draft versions of the developing Company Tax return forms and supplementary pages on the internet to help software developers and substitute form producers to create their products.

These versions may be subject to some minor amendments during proof reading, but any changes will be shown in the final versions published on the website.

Draft versions have no legal status and aren’t in a prescribed form. They must not be used by companies to deliver their Company Tax returns.

If you have any comments you can contact:

Email: andrew.hughes@hmrc.gsi.gov.uk

Drafts are only available for software developers and substitute form producers.

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Published 25 March 2015
Last updated 27 July 2020 + show all updates
  1. The page has been updated with the addition of information on identical tax returns and removal of information on substitute tax returns.

  2. This guide has been updated with changes following the 2020 Spring Budget.

  3. This guide has been updated with changes following the 2018 Autumn Budget.

  4. Following the 2017 Autumn Budget, this page has been updated to include detail of the main changes that will affect a company’s Corporation Tax return and Self-Assessment.

  5. Updates made following 2016 Autumn Statement announcement.

  6. Updates made following March 2016 Spring Budget announcement.

  7. Updates made following July 2015 Summer Budget announcement.

  8. First published.