CT600 for Builders: Filing Your Company Tax Return
Builders and construction companies operating through a limited company must file a company tax return — officially the CT600 — with HMRC each year. Construction is one of the more complex sectors for tax purposes, with unique considerations including the Construction Industry Scheme (CIS), significant plant and machinery costs, and fluctuating project income.
What Goes in Your Company Tax Return?
Your company tax return reports your taxable profits and calculates the corporation tax owed. For a building company, this typically includes:
- Revenue from completed contracts and ongoing construction projects
- Allowable business expenses — materials, subcontractors, wages, and vehicle costs
- Capital allowances on plant, machinery, and commercial vehicles
- Any CIS tax deducted from payments you received as a subcontractor
- The final corporation tax due
Corporation Tax Rates for Building Companies
The corporation tax rate your company pays depends on its annual taxable profits:
| Profits | Rate |
|---|---|
| £50,000 or less | 19% (small profits rate) |
| £50,001 – £250,000 | Marginal relief applies |
| Over £250,000 | 25% (main rate) |
Source: GOV.UK Corporation Tax rates
The Construction Industry Scheme (CIS)
The Construction Industry Scheme has a direct impact on your company tax return and is one of the most important things to get right.
When Your Company Is the Subcontractor
When a contractor pays your company for construction work, they are required under CIS to deduct tax — typically 20% — from the labour element of the payment before it reaches you. These deductions are recorded by HMRC against your company's tax account.
At year-end, the total CIS deductions suffered by your company can be offset against your corporation tax liability. If the CIS deductions exceed the tax due, your company may be entitled to a refund. Accurate records of all CIS deduction statements are essential for this process.
When Your Company Is the Contractor
If your company engages subcontractors, you must verify their CIS registration status with HMRC and apply the correct deduction rate (0% for gross payment status, 20% for registered subcontractors, or 30% for unregistered). Payments to subcontractors are an allowable expense for your company — reducing your taxable profit.
Allowable Expenses for Builders
Claiming all legitimate expenses reduces your taxable profit. Expenses must be incurred wholly and exclusively for business purposes.
Materials and Subcontractors
The most significant costs for most building companies:
- Materials — bricks, timber, electrical components, plumbing supplies, and all materials purchased for contracts
- Subcontractor costs — payments to other tradespeople and specialists working on your projects
- Skip hire and waste disposal on site
- Plant hire when you hire in machinery for specific jobs
Tools and Small Equipment
Smaller tools — hand tools, drill bits, safety equipment — are generally classed as revenue expenses and deducted in full in the year of purchase. Larger capital items are handled through capital allowances (see below).
Vehicle Running Costs
Most builders rely on vans or commercial vehicles:
- Van running costs — fuel, insurance, servicing, repairs, and road tax
- Commercial vehicle lease payments if the vehicle is leased
- Mileage if you use a personally-owned vehicle at HMRC's approved rates
Site and Safety Costs
- Personal protective equipment (PPE) — hard hats, high-visibility vests, safety boots
- Site signage and safety equipment
- Scaffold hire (where not included in subcontractor costs)
- Site security
Employee Wages and Costs
- PAYE wages for employees are an allowable expense
- Employer's National Insurance contributions
- Workplace pension contributions made on behalf of employees
Professional Fees
- Accountancy and bookkeeping fees
- Legal advice on contracts or disputes
- Public liability and employers' liability insurance
- Relevant trade body memberships such as the Federation of Master Builders
Capital Allowances for Builders
Builders often make significant investments in plant and equipment — excavators, generators, scaffolding, cement mixers, and commercial vehicles. These assets are not simply deducted as expenses; you claim capital allowances on them instead.
The Annual Investment Allowance (AIA) allows you to deduct 100% of qualifying plant and machinery costs in the year of purchase. This is particularly valuable for building companies that invest in expensive equipment.
Commercial vans used exclusively for business may also qualify for the First Year Allowance or writing-down allowances.
See our guide to capital allowances on the CT600 for full details on how to report these correctly and avoid missing valuable reliefs.
Revenue Recognition on Construction Contracts
Construction projects often span multiple accounting periods. Generally, profits on long contracts are recognised progressively as work is completed — known as the stage-of-completion method. Profits are taxed in the accounting period in which they arise.
It is important that your accounting treatment is consistent year-on-year and accurately reflects the position of each contract at the period end. Inconsistent revenue recognition can trigger HMRC enquiries.
Filing Deadlines
- CT600 filing deadline: 12 months after the end of your accounting period
- Corporation tax payment deadline: 9 months and 1 day after the end of your accounting period
Common Mistakes Builders Make
Not recording CIS deductions properly: If you do not keep CIS deduction statements received from contractors, you may fail to offset the tax at year-end or miss a repayment.
Missing capital allowances: Expensive plant and equipment purchases can often be fully written off in the year of purchase through the AIA — overlooking this is a costly mistake.
Mixing personal and business vehicle costs: If a van is used privately as well, only the business proportion is allowable.
Omitting small tools and consumables: Routine purchases of hand tools, drill bits, fixings, and PPE are all allowable expenses that are easy to overlook.
Applying incorrect CIS deduction rates: Using the wrong rate on subcontractor payments creates complications at year-end and may result in penalties.
Ignoring associated company rules: If you own shares in more than one company (for example, a separate plant hire company), the corporation tax thresholds may be reduced.
Summary
Builders and construction companies operating through a limited company pay corporation tax at 19% or 25% depending on profits, with marginal relief available between £50,000 and £250,000. The Construction Industry Scheme creates important interactions with your company tax return — CIS deductions suffered can offset corporation tax, while subcontractor payments are allowable expenses. Capital allowances on plant, machinery, and vehicles are one of the most significant reliefs available to builders, and claiming them correctly reduces your annual tax bill significantly.