CT600 for Marketing Agencies: Complete Guide

Marketing agencies have specific CT600 considerations around service income, media spend pass-throughs, and contractor payments. This guide covers what digital and traditional marketing agencies need to know.

Marketing Agency Income

Types of Income

Revenue Type	CT600 Treatment
Retainer fees	Trading income (Box 150)
Project fees	Trading income (Box 150)
Commission on media	Trading income (Box 150)
Consultancy fees	Trading income (Box 150)

All marketing agency income is trading income reported in Box 150.

Gross vs Net Income

A key question for agencies:

Scenario	How to Record
You charge client £50k, pay media £40k	Option 1: £50k income, £40k cost. Option 2: £10k net income
Pure fee-based work	Full fee as income

Either approach is acceptable if consistent.

Common Marketing Agency Expenses

Staff Costs

Expense	Deductible?
Employee salaries	Yes
PAYE/NI	Yes
Pension contributions	Yes
Staff training	Yes
Recruitment costs	Yes

Operational Costs

Expense	Deductible?
Office rent	Yes
Software subscriptions	Yes
Equipment	Yes (or capital allowance)
Professional indemnity insurance	Yes
Website hosting	Yes

Marketing-Specific Costs

Expense	Deductible?
Stock photography	Yes
Design software (Adobe, etc.)	Yes
Marketing tools (HubSpot, SEMrush)	Yes
Freelancer payments	Yes
Media buying on behalf of clients	Yes (if you record gross)

Contractor and Freelancer Costs

Common Freelancer Types

Copywriters
Designers
Developers
SEO specialists
Social media managers

Tax Treatment

Freelancer Status	Your Treatment
Self-employed (invoice)	Deductible expense
Through umbrella	Deductible expense
Your employee	Payroll expense

All reduce your taxable profit.

Media Spend Accounting

Pass-Through Media

When you pay for media on client's behalf:

Option 1: Gross Method

Income: Client payment (£50,000)
Cost: Media spend (£40,000)
Profit: £10,000

Option 2: Net Method

Income: Your fee only (£10,000)
Media not in your accounts

Principal vs Agent

Role	Accounting
Principal	Gross method (you're liable)
Agent	Net method (client liable)

Most agencies act as principal and use gross accounting.

Capital Allowances

Qualifying Equipment

Item	Capital Allowances?
Computers	Yes (AIA)
Design workstations	Yes (AIA)
Video equipment	Yes (AIA)
Office furniture	Yes (AIA)
Company vehicles	Yes (with restrictions)

Annual Investment Allowance

100% deduction in year of purchase:

Up to £1,000,000 limit
Covers most agency equipment needs

Research & Development

Does R&D Apply to Agencies?

Some marketing agencies can claim R&D:

Developing new marketing technology
Creating innovative platforms
Building proprietary tools

Creative work alone doesn't qualify - there must be technological advancement.

CT600 Filing Example

Marketing Agency Scenario

Annual Figures:

Client fees: £600,000
Media pass-through: £200,000
Staff costs: £350,000
Office/overheads: £80,000
Software/tools: £25,000
Freelancers: £45,000

Using Gross Method:

Box	Description	Amount
150	Trading income	£800,000
155	Gross profit	£300,000
160	Net profit	£100,000
165	Trading profits	£100,000
300	Profits chargeable	£100,000
315	CT due	~£21,250

Bad Debts

Client Non-Payment

Marketing agencies often face:

Clients disputing work quality
Long payment terms
Insolvency of clients

CT600 Treatment

Stage	Treatment
Specific doubt	Provision possible
Written off as bad	Tax deduction
Later recovered	Add back to income

Software and Subscriptions

Common Deductible Software

Software Type	Examples
Creative	Adobe Creative Cloud, Figma
Project management	Asana, Monday, Basecamp
Marketing tools	HubSpot, Mailchimp, SEMrush
Accounting	Xero, QuickBooks
Communication	Slack, Zoom

All subscriptions are deductible as business expenses.

When Using TinyTax

TinyTax handles marketing agency CT600s:

Enter service income (gross or net method)
Record all operating expenses
Claim capital allowances on equipment
CT600 generated automatically

TinyTax simplifies the filing process for service businesses.

Need Help?

TinyTax makes CT600 filing straightforward for marketing agencies. Enter your income and expenses, and the software handles the calculations.

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