CT600 for Musicians: Complete Corporation Tax Guide
Musicians who run their business through a limited company must file a company tax return — the CT600 — with HMRC every year. This guide explains how corporation tax applies to music businesses, which income streams to report, and how to make the most of capital allowances on instruments and studio equipment.
Who Needs to File a CT600?
If you trade through a limited company, the company must file a CT600 every year — even if it made a loss or has no corporation tax to pay. You file a Self Assessment tax return personally for your salary and dividends; the CT600 covers the company's profits separately.
Sole traders and members of partnerships do not use the CT600. They report income through Self Assessment instead.
Key filing dates:
- CT600 filing deadline: 12 months after your accounting period ends
- Corporation tax payment deadline: 9 months and 1 day after your accounting period ends
Types of Musician Income on the CT600
Music income can take many forms. All of the following are trading income for a musician's limited company, reported in Box 150 of the CT600:
| Income Type | CT600 Treatment |
|---|---|
| Live performance fees | Trading income (Box 150) |
| Session musician fees | Trading income (Box 150) |
| PRS royalties from compositions | Trading income (Box 150) |
| PPL royalties | Trading income (Box 150) |
| Streaming revenue (Spotify, Apple Music) | Trading income (Box 150) |
| Sync licensing fees | Trading income (Box 150) |
| Music production fees | Trading income (Box 150) |
| Music lesson income | Trading income (Box 150) |
| Merchandise sales | Trading income (Box 150) |
| Record advances | Trading income (when earned) |
Royalties and Sync Licensing
PRS for Music and PPL royalties paid to your company are trading income. Keep all royalty statements as supporting documentation — HMRC may request them. If PRS pays you personally and you pass the funds to your company, ensure this is handled correctly in your company accounts.
Sync licensing — where your music is used in TV, film, or advertising — can be a significant income stream. Retain copies of all sync agreements, as each deal is a separate contract that your accountant will need to include in your accounts.
Instruments and Equipment: Capital Allowances
Instruments and music equipment qualify for the Annual Investment Allowance (AIA), which allows your company to deduct the full purchase cost in the year of acquisition.
Musical Instruments
| Equipment | AIA Eligible? |
|---|---|
| Guitars, basses, drums, keyboards | Yes |
| Amplifiers and speaker cabs | Yes |
| Electronic instruments (synths, drum machines) | Yes |
| Microphones | Yes |
| In-ear monitors and IEM systems | Yes |
| PA equipment for performances | Yes |
| Road cases and protective equipment | Yes |
Home Studio Equipment
| Equipment | AIA Eligible? |
|---|---|
| Audio interface | Yes |
| Studio monitors | Yes |
| MIDI controllers | Yes |
| Outboard gear (compressors, preamps, EQ) | Yes |
| Acoustic treatment panels | Yes |
| Recording computer | Yes |
| External hard drives and NAS storage | Yes |
Example Capital Allowances Claim
| Item | Cost | Tax Saving (19%) |
|---|---|---|
| Custom guitar | £3,200 | £608 |
| Apollo x6 audio interface | £1,800 | £342 |
| Pair of studio monitors | £1,200 | £228 |
| MIDI controller | £600 | £114 |
| Recording computer | £2,400 | £456 |
| Total | £9,200 | £1,748 |
Music Production Software
DAW (Digital Audio Workstation) licences and production software are fully deductible:
| Software | Deductible? |
|---|---|
| Logic Pro | Yes |
| Ableton Live | Yes |
| Pro Tools subscription | Yes |
| Splice samples subscription | Yes |
| Native Instruments Komplete | Yes |
| Plugin Alliance, FabFilter, iZotope | Yes |
| Waves plugins | Yes |
| Sample libraries | Yes |
Tour and Performance Expenses
| Expense | Deductible? |
|---|---|
| Travel to venues and studios | Yes |
| Accommodation on tour | Yes |
| Rehearsal room hire | Yes |
| PA, backline, and sound hire | Yes |
| Band member wages or fees | Yes |
| Tour management fees | Yes |
| Instrument insurance and repair | Yes |
| Road transport and van hire | Yes |
| Catering for the band | Yes |
Home Studio as a Business Expense
If you record and produce from a dedicated room at home, you can claim a proportion of your household costs as a company expense.
Calculation method:
- Calculate your studio room floor area as a percentage of total home floor area
- Apply that percentage to eligible household bills
- Home total: 1,100 sq ft
- Studio room: 165 sq ft (15%)
- Annual household bills: £8,400
- Claimable amount: £1,260
Session Musician Work and IR35
Session musicians who work regularly and exclusively for a single orchestra, broadcaster, or recording company should consider whether IR35 applies. Since April 2021, medium and large businesses (the "end clients") are responsible for determining IR35 status and must issue a Status Determination Statement (SDS).
If you are classified as "inside IR35", your client must deduct PAYE and National Insurance before paying your company. This effectively removes the tax advantage of operating through a limited company for that engagement.
Factors that support "outside IR35" status for musicians:
- Multiple clients across different venues, labels, or productions
- Short, project-based engagements
- Substitution rights (you can provide another musician if unavailable)
- No obligation from either party to offer or accept ongoing work
- You supply your own instruments and equipment
Corporation Tax Rates
Your company pays corporation tax on its profits at:
- 19% — profits of £50,000 or less (small profits rate)
- 25% — profits over £250,000 (main rate)
- Marginal Relief — profits between £50,000 and £250,000
Most musician-owned limited companies will fall within the small profits rate. The thresholds are reduced proportionately if your accounting period is shorter than 12 months, or if your company has associated companies.
Late Filing Penalties
HMRC issues automatic penalties for late CT600 filing:
| Days Late | Penalty |
|---|---|
| 1 day | £100 |
| 3 months | Additional £100 |
| 6 months | 10% of unpaid tax |
| 12 months | Further 10-20% of unpaid tax |
Summary
Musicians with limited companies have access to a wide range of deductions — from capital allowances on instruments and studio equipment to tour expenses and production software. Keeping clear records of all income streams, including PRS royalties, sync fees, and lesson income, is essential for an accurate CT600. File within 12 months of your accounting period end and pay any corporation tax by the 9-months-plus-one-day deadline to avoid penalties.
For a full explanation of every field on the company tax return, see CT600 Boxes Explained.