Are Dividends Included in the CT600?

Dividends paid to shareholders are not included in your CT600 corporation tax return. This is one of the most common questions for owner-managed companies.

Why Dividends Are Not in the CT600

Your CT600 calculates corporation tax on your company's taxable profits — the income the company earned, minus allowable expenses. Dividends are payments made from post-tax profits to shareholders. They are not a business expense and have no effect on taxable income.

The sequence is:

1. Company earns income
2. Allowable expenses are deducted → gives taxable profit
3. Corporation tax is calculated on taxable profit
4. Tax is paid to HMRC
5. What's left is post-tax profit — the company can then pay dividends from this

Dividends happen after the tax calculation. They cannot reduce your tax bill.

What to Do if You Paid a Dividend

Nothing — you do not need to enter dividends paid to shareholders anywhere in TinyTax. Simply leave the dividend income field blank (or at £0) unless your company received dividends from another company.

Dividend Income Received by Your Company

If your company received dividends as income — for example, from shares held in another company — enter the total in the Dividend income field in the P&L section. This field is available when you select the Mixed Income company type.

How to access it:

1. Open your filing form
2. In the Company type section at the top, select Mixed Income
3. The P&L section will show a Dividend income row — enter the total dividends received here

Dividend income is exempt from corporation tax, but it is included in your augmented profits for marginal relief calculations (Box 620 on the CT600).

Capital Gains from Selling Shares

If your company sold shares at a profit, enter the net chargeable gain in the Chargeable gains field in the P&L section. This field also appears under the Mixed Income company type (Box 210/220 on the CT600).

The net chargeable gain is your sale proceeds minus allowable costs (original acquisition cost plus any incidental dealing costs).

Unrealised Changes in Share Valuations

Changes in the value of shares you still hold — sometimes called mark-to-market or unrealised gains and losses — are not subject to corporation tax. Only gains on shares you have actually sold are taxable as chargeable gains.

For your accounts:

• FRS 105 (micro-entity accounts): Investments are carried at cost — no P&L adjustment is needed for value changes while the shares are held.
• FRS 102 accounts: If you are recognising fair value movements, enter gains in Other income and losses in Other charges in the P&L section.

Common Questions

Does paying myself a salary affect the CT600?

Yes — directors' salaries are an allowable business expense and reduce your taxable profit. Enter them under Staff costs in the P&L section. Dividends are separate from salary and do not reduce profit.

Should I enter dividends as a disallowable expense?

No — only enter something as disallowable if you already included it as an expense in your P&L (for example, client entertaining or personal costs). Dividends should not appear as an expense at all.

My accountant listed dividends in my accounts — why are they not in the CT600?

Dividends appear in your company's statutory accounts as a distribution, but they do not appear in the CT600. Your accounts and your CT600 serve different purposes. TinyTax handles both correctly — dividends paid are not part of the CT600 calculation.