CT600 for Construction Companies: Complete Guide
Filing a CT600 for a construction company involves specific considerations around the Construction Industry Scheme (CIS), capital allowances on equipment, and expense treatments. This guide covers everything builders need to know.
Construction Company CT600 Basics
Standard Trading Structure
Most construction company CT600s follow the standard format:
- Box 150: Gross income (contract values, invoiced work)
- Box 155: Gross profit (after materials and subcontractors)
- Box 160/165: Net trading profit (after all expenses)
Key Construction Considerations
| Factor | CT600 Impact |
|---|---|
| CIS deductions suffered | Tax credit claim |
| Capital equipment | Capital allowances |
| Subcontractor payments | Allowable expense |
| Material costs | Allowable expense |
| Site costs | Allowable expense |
The Construction Industry Scheme (CIS)
How CIS Affects Your CT600
If your construction company receives payments under CIS:
- Customers may deduct 20% or 30% from payments
- You receive net payments
- The deductions are tax credits
- Credits offset your Corporation Tax bill
Recording CIS Deductions
Income Recording:
- Enter GROSS contract values in accounts
- Not the net amount received
- CIS deductions suffered are claimed as tax credits
- Offset against your CT600 tax liability
- Can result in a refund if credits exceed tax
Example
| Item | Amount |
|---|---|
| Contract value (gross) | £10,000 |
| CIS deduction (20%) | (£2,000) |
| Amount received | £8,000 |
| Taxable income | £10,000 |
| CIS credit | £2,000 |
Capital Allowances for Construction
Equipment Commonly Qualifying
| Equipment | Capital Allowances? |
|---|---|
| Vans and trucks | Yes (limited for cars) |
| Power tools | Yes |
| Scaffolding | Yes |
| Excavators/plant | Yes |
| Site cabins | Yes |
| Safety equipment | Often expense (not CA) |
Annual Investment Allowance
Construction companies often benefit from AIA:
- 100% deduction in year of purchase
- Up to £1,000,000 per year
- Covers most plant and equipment
Example: Equipment Purchase
| Item | Cost | AIA | Tax Saving (19%) |
|---|---|---|---|
| Transit van | £35,000 | £35,000 | £6,650 |
| Power tools | £5,000 | £5,000 | £950 |
| Excavator | £45,000 | £45,000 | £8,550 |
Allowable Construction Expenses
Direct Costs
| Expense | Treatment |
|---|---|
| Materials | Deductible |
| Subcontractor labour | Deductible (net of CIS) |
| Equipment hire | Deductible |
| Skip hire | Deductible |
| Scaffolding hire | Deductible |
Overheads
| Expense | Treatment |
|---|---|
| Yard/workshop rent | Deductible |
| Insurance (public liability, CAR) | Deductible |
| Professional subscriptions | Deductible |
| Training and certifications | Deductible |
| Accounting fees | Deductible |
Vehicle Costs
| Cost Type | Treatment |
|---|---|
| Fuel for work vehicles | Deductible |
| Van insurance | Deductible |
| Servicing/repairs | Deductible |
| Purchase (via CA) | Capital allowance |
Work in Progress (WIP)
Accounting for Incomplete Jobs
Construction companies often have work in progress:
- Jobs started but not invoiced
- Materials on site for future work
- Partially complete contracts
CT600 Treatment
WIP affects your profit calculation:
- Closing WIP increases profit
- Opening WIP reduces profit
- Must be valued consistently
Example
| Item | Amount |
|---|---|
| Sales invoiced | £200,000 |
| Add: Closing WIP | £30,000 |
| Less: Opening WIP | (£25,000) |
| Turnover for tax | £205,000 |
Subcontractor Payments
CIS Compliance
When paying subcontractors:
- Verify their CIS status
- Deduct appropriate CIS (if required)
- File monthly CIS returns
- This is separate from CT600 but affects cash flow
CT600 Recording
| Payment Type | CT600 Treatment |
|---|---|
| Net to subcontractor | Expense |
| CIS deducted | Not your expense (HMRC's) |
| Total contract cost | Your accounts show gross |
Common Construction Tax Issues
Retention Payments
Retentions (held back until defects period):
- Don't count as income until released
- Or when defects period expires
- Accounting policy must be consistent
Long-Term Contracts
Contracts spanning accounting periods:
- May need to recognise partial profit
- Depends on contract terms
- Professional advice often needed
Director's Personal Use
If directors use company vehicles personally:
- Benefit in kind reporting required
- May affect company tax position
- Keep clear records of business vs personal use
CT600 Filing Example
Construction Company Scenario
Turnover and Costs:
- Contract income: £450,000
- Materials: £120,000
- Subcontractors: £150,000
- Other costs: £80,000
- Capital allowances: £25,000
| Box | Description | Amount |
|---|---|---|
| 150 | Gross trading income | £450,000 |
| 155 | Gross profit | £180,000 |
| 165 | Trading profits | £75,000 |
| 300 | Profits chargeable | £75,000 |
| 315 | CT @ 19% | £14,250 |
When Using TinyTax
TinyTax handles construction company CT600s:
- Enter gross income (before CIS deductions)
- Record all expenses (materials, subs, overheads)
- Claim capital allowances (equipment purchases)
- CT600 generated automatically
Related Articles
- Capital Allowances on CT600
- CT600 Box 150: Trading Income
- CT600 Common Mistakes
- CT600 Boxes Explained
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