CT600 for Recruitment Agencies: Complete Guide

Recruitment agencies have specific CT600 considerations around income recognition, contractor payments, and operating costs. This guide covers everything recruiters need to know.

Recruitment Business Models

Types of Recruitment Income

Model	Income Type	CT600 Treatment
Permanent placement	Commission/fees	Box 150
Temp/contract (own book)	Gross margin	Box 150
Temp (third party payroll)	Commission	Box 150
Retained search	Fees	Box 150

All recruitment income is trading income - it goes in Box 150.

Income Recognition

Permanent Placements

Income is typically recognised when:

• Candidate starts employment
• Or after rebate period ends
• Depends on accounting policy

Contract/Temp Income

Component	Treatment
Charge to client	Income
Payment to temp	Cost
Margin	Profit

Recognition Timing

Basis	When Recognised
Invoice basis	When invoiced
Work done basis	As work performed
Cash basis	When paid (rare for CT)

Contractor Costs

Employment Status Matters

How you pay contractors affects your CT600:

Worker Type	Your CT600
Your employee	PAYE cost = expense
Self-employed	Invoice cost = expense
Through umbrella	Umbrella invoice = expense

Typical Cost Structure

For a temp billing £400/day:

Item	Amount
Client invoice	£400
Temp pay (umbrella)	£320
Gross margin	£80

The £80 margin is your trading income.

Agency Operating Expenses

Common Allowable Expenses

Expense	Deductible?
Consultant salaries	Yes
Office rent	Yes
Job board subscriptions	Yes
CRM/ATS software	Yes
Marketing/advertising	Yes
Insurance (PI, public liability)	Yes
Training and CPD	Yes
Travel (business)	Yes

Typical Expense Profile

Category	% of Turnover
Contractor costs	70-85%
Staff costs	5-15%
Overheads	3-8%
Net profit	5-15%

Gross vs Net Accounting

Understanding Your Numbers

Recruitment agencies often show different figures:

Metric	Meaning
NFI (Net Fee Income)	Your actual earnings
Gross billings	Total invoiced to clients
Temporary turnover	Includes contractor pass-through

CT600 Approach

Option 1: Gross Method

• Box 150: Total client billings
• Costs include contractor payments
• Shows full transaction value

Option 2: Net Method

• Box 150: Net fee income only
• Contractor payments not shown
• Shows margin only

Both are acceptable if consistent.

Bad Debts

Client Non-Payment

When clients don't pay:

• Can claim bad debt relief
• Reduces taxable profit
• Must be genuinely irrecoverable

Timing

Stage	Treatment
Doubt about payment	Provision possible
Written off	Tax deduction
Later recovered	Add back to income

IR35 Considerations

Impact on Agencies

IR35 rules affect recruitment:

• Must assess contractor status
• May need to operate PAYE
• Compliance costs are deductible

CT600 Treatment

IR35 doesn't change your Corporation Tax:

• Still claim contractor costs
• PAYE/NI are payroll costs
• Your margin remains the same

Rebate Provisions

Handling Rebates

Permanent placement rebates:

• Reduce income when rebate paid
• Or provide for expected rebates
• Consistent treatment required

Example

Item	Amount
Placement fee	£10,000
Expected rebate (5%)	(£500)
Net income	£9,500

CT600 Filing Example

Recruitment Agency Scenario

Annual Figures:

• Permanent placement fees: £200,000
• Temp margin: £150,000
• Staff costs: £180,000
• Office/overheads: £50,000
• Marketing: £20,000

CT600 Key Boxes:

Box	Description	Amount
150	Trading income (NFI)	£350,000
155	Gross profit	£350,000
160	Net profit	£100,000
165	Trading profits	£100,000
300	Profits chargeable	£100,000
315	CT due	~£21,250

Cash Flow vs Profit

Recruitment Cash Flow

Agencies often have cash flow challenges:

• Pay temps weekly
• Invoice clients monthly
• Creates working capital need

CT600 Timing

Corporation Tax is based on profit, not cash:

• Invoice raised = income (even if unpaid)
• Expense incurred = deductible
• Cash timing is separate

When Using TinyTax

TinyTax handles recruitment agency CT600s:

1. Enter net fee income (or gross with costs)
2. Record all operating expenses
3. CT600 generated automatically
4. Tax calculated on trading profits

TinyTax simplifies the process - just enter your figures and the software does the rest.

Related Articles

• CT600 Box 150: Trading Income
• CT600 for IT Consultants
• CT600 Common Mistakes
• CT600 Boxes Explained

Need Help?

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

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