Tax Journal

Back to basics: CT61s and accounting for income tax

16 June 2011
SPEED READ

When companies make certain payments they are required to deduct income tax at source. Patent royalties received by companies from individuals are received net of 20% tax. For each quarter the company is required to calculate any amounts due to HMRC. These calculations are made on the quarterly return form CT61. The due date for the income tax is 14 days after the end of the quarter.

If the tax suffered by the company exceeds the tax withheld, a refund of tax is required from HMRC for that quarter. However, HMRC will not repay more than the amount of tax that the company has already paid over so far in the accounting period. Any excess tax suffered is carried forward to a later quarter. If it has not been fully recovered by the end of the accounting period, it is deducted from the CT liability. If the income tax suffered exceeds the CT liability for the period, any balance will be repaid by HMRC.

Simon Groom with your refresher guide to the rules

When companies make certain payments they are required to deduct income tax at source, as set out in the Table.

For each CT61 quarter the tax withheld from payments made net (ie, tax to be paid over to HMRC) is compared with the tax suffered on receipts received net (ie, tax which can be reclaimed from HMRC).

If the tax withheld exceeds the tax suffered, the net amount is the amount of tax the company must pay over to HMRC for that quarter.

If the tax suffered by the company exceeds the tax withheld, a refund of tax is required from HMRC for that quarter.

Table: Income tax treatment

Payment Recipient Income tax treatment Interest/royalties UK companies Paid gross Interest/royalties EU associates Can be paid gross Patent royalties Individuals Net ...

This content is available to magazine subscribers only.

Subscribe now!

Get an annual subscription to Tax Journal  for £456. Have unrestricted access to Taxjournal.com and you'll also receive the print magazine - to make sure you never miss what matters in tax.

When it comes to keeping informed on tax, Tax Journal provides something a little different...

  • Tax Journal prides itself on the calibre of its contributors, and the quality and usefulness of its information.
  • The journal is widely regarded as the best source of insight on business and corporate tax issues. It is relied upon by thousands of leading experts - including those in the professional firms, in industry and at HMRC alike.
  • A subscription provides unrestricted access to this website for cutting edge research on tax, plus the print journal to ensure you never miss what matters.
  • In addition to expert commentary on new developments, Tax Journal provides an archive of 'Back to basics' and 'Practice guides' to help you handle knotty tax issues in practice
  • Plus bespoke tax news and and archive of hundreds of tax case summaries, all specially written by our tax qualifies news and case editors.

What our readers say 

‘What sets it apart is the quality of its contributors.’ - Ken Almand, Tax Adviser, Baker Tilly

‘Tax Journal can always be relied upon to provide articles covering relevant and highly topical issues, but without being too long or onerous.’ - Jennie Rimmer, Head of Tax, Aspen Re

‘My favourite aspects are the Speed Reads, the Back to Basics articles and the case summaries.’ - Tanya Richards, Director of Tax, British Sky Broadcasting Group plc

‘Tax Journal is at the cutting edge of tax legislative changes and HMRC proposed initiatives. It leads the way in informed debate.’ - Aileen Barry, Director, DLA Piper UK LLP

‘For me, Tax Journal is an essential read – not only to get a feel for what experts in all areas of tax are talking about but also to check what is being said in the area in which I specialise.’ - Jason Collins, Tax Partner, Pinsent Masons