Completing the Corporation Tax supplementary page (CT600A) in FreeAgent

This article explains how to complete the Corporation Tax supplementary page (CT600A) in FreeAgent.

When is the CT600A required?

Participators and associates who were lent money by a close company, where the money hasn’t been repaid as at the end of the company’s accounting year, need to report these balances to HMRC using the CT600A form. Your company will need to pay Corporation Tax (S455 tax) on any outstanding loan to a participator.

A 'participator' is “a person having a share or interest in the capital or income of the company” and includes any loan creditor of the company. For most small limited companies, participators will be shareholders, who will often also be directors. If the company has issued debt finance called debentures, then the holders of the debentures may also be participators.

An 'associate' is a relative or partner of a participator and the trustee of any settlement of which the participator or their relative is, or was, a settlor.

If the criteria above apply to your company, you will need to complete the CT600A form along with your company’s Corporation Tax return (CT600). You’ll also need to disclose details of the loan on your Final Accounts report. You can find out more about your Corporation Tax responsibilities if a director, or other participator, owes money at the company’s year end on the government’s website.

At the company’s year end date, FreeAgent adds together the balances of the following accounts:

• ‘900 - Smart User Payments’
• ‘902 - Net Salary and Bonuses’
• ‘904 - Benefits in Kind’
• ‘905 - Expense Account’
• ‘907 - Director Loan Account’

If these accounts add up to a debit (i.e. overdrawn) balance, the loan account is overdrawn and this indicates that the participator owes the company money. A credit balance indicates that the company owes the participator money. Credit balances typically don’t need to be reported on form CT600A.

If the company’s accounting year is longer than 12 months, you will need to complete two sets of Corporation Tax returns for HMRC. If you have an overdrawn loan account at the end of both accounting periods, you will need to complete CT600A forms for both accounting periods.

Please note that our support team can’t help you with completing the CT600A form as we’re not authorised by HMRC to provide accounting advice. If you’re unsure about the information that you need to enter on your CT600A form, please check with your accountant or with HMRC.

You will have full access to the CT600A if you hold the user role of ‘Director’ in FreeAgent and have full (level 8) access to the software. If you have full (level 8) access but hold a role other than ‘Director’, you will be able to view the CT600A but won’t be able to complete it.

S455 tax

Your company will need to pay Corporation Tax on any outstanding loan to a participator. This is called S455 tax. Your company will need to pay S455 tax on any outstanding loan to a participator which isn’t paid back to the company, released (that is, the participator waives their legal right to repayment) or written off within nine months of the end of its Corporation Tax accounting period.

Please note that your company can reclaim the S455 tax it pays on a loan to a participator that’s been paid back to the company, written off or released. You can use the form CT600A part 3 with your original Company Tax Return to submit an amendment and reclaim S455 tax paid on a loan, if you’re reclaiming within two years of the end of the accounting period when the loan was taken out. Alternatively, you can use form L2P. If you’re reclaiming two years or more after the end of the accounting period when the loan was taken out, you should use the form L2P. For more information, please see HMRC’s guidance.

Navigating to the CT600A

Navigate to the Corporation Tax area of your FreeAgent account by selecting ‘Corporation Tax’ from the ‘Taxes’ drop-down menu.

To access FreeAgent’s Corporation Tax computations for a particular accounting period, select the appropriate year from the ‘Description’ column.

Select the ‘CT600A’ tab.

Please note that the CT600A supplementary page, which is divided into three parts, is only available in FreeAgent for accounting years ending on or after 27th October 2020. If your accounting period ends before this date, you'll need to file your CT600 and CT600A outside of FreeAgent.

If you need to use Part 3 of the form CT600A, you will need to file your Corporation Tax return outside of FreeAgent as Part 3 is not supported by FreeAgent. Once you have filed your Corporation Tax return you will then need to manually mark your Corporation Tax return as filed in FreeAgent by navigating to the relevant Corporation Tax return and selecting ‘Mark as filed’.

Enabling and disabling the CT600A supplementary page

If the balances in the ‘Smart User Payments’, ‘Net Salary and Bonuses’, ‘Benefits in Kind’, ‘Expense Account’ and ‘Director Loan Account’ accounts of a user with a role of either ‘Shareholder’ or ‘Director’ add up to an overall debit balance at your company’s accounting period end, box 95 on your CT600 will be set to ‘Yes’ automatically and the CT600A supplementary page will be enclosed under the ‘CT600A’ tab.

If you would like the CT600A supplementary page to be disabled, select ‘No’ in box 95 on your CT600.

Completing the CT600A

Company information

This section of the form includes your company name, tax reference and tax period, all of which will be filled in by FreeAgent automatically.

Part 1: Loans and arrangements made

If any or all loans that the company made to participators or associates during the accounting period have been repaid, released or written off, select ‘Yes’ in box A5. You will also need to select ‘Yes’ in the case of arrangements "to avoid or reduce, or obtain a relief or increased relief from, a charge to tax on the company under section 455, or to obtain a tax advantage for the participator or associate", where return payments have been made before the end of the period. Otherwise, select ‘No’.

Please note that if you don’t select an answer to box A5, FreeAgent will automatically submit ‘No’ when you file your Corporation Tax return to HMRC.

Outstanding loans and arrangements made during the period

Enter the name of the participator or associate in column A and the amount of money the company lent to that person, which hasn’t yet been repaid as at the end of the accounting period, in column B of box A10.

Please note that FreeAgent won’t be able to fill in these boxes for you as there are different ways to calculate the outstanding amount. If you’re unsure what this figure should be, please speak to your accountant.

HMRC advises (on page 24) that you should enter the total value of all the debit balances (money owed to the company) on the loan account, minus any credit balances (money owed by the company) and minus any credit balances brought forward from the previous Corporation Tax return period. You must exclude any credit entries that represent repayment, release or write-off of loans made in earlier Corporation Tax return periods.

For example, if the company lent a participator money two years ago and they’ve reported that loan already, and then the participator repaid the money this year, you wouldn’t have to include that repayment.

If the accounting period ends on or after 6th April 2022, you can select the relevant tax rate to apply to the loan in column C. You can choose to apply the rate of 32.5% on loans taken before 6th April 2022 or the rate of 33.75% on loans taken on or after 6th April 2022.

To add details for additional loans, select ‘Add new loan’. To remove details for a loan, select the cross to the right-hand side of the relevant details.

Box A15 includes the total amounts of new loans made to participators during the accounting period and will be automatically calculated by FreeAgent based on the information you put into box A10.

Box A20 includes the amount of tax that will be due to HMRC for the accounting period before any relief for loans repaid is deducted. FreeAgent will automatically calculate this figure by applying the tax rate that you select in column C of box A10, to the total amount of new loans made during the accounting period in box A15.

Part 2: Relief for return payments and/or amounts repaid, released or written off within 9 months

You will need to complete Part 2 of the CT600A form to obtain tax relief for amounts entered into box A10 that were repaid, released, or written off if:

• the Corporation Tax return is for the accounting period in which the loans were made or the benefit conferred, and
• the loan was repaid, released or written off (or a return payment made for the value of the benefit) after the end of the accounting period, but earlier than nine months and one day after the end of the accounting period in which the loan was made

For example, if your company’s accounting period ends on 31st December and it lent you some money on 1st December, which you repaid on 31st January, you would include that repayment in Part 2 because you made it after the year end but before the nine-month window has closed.

If you need to complete Part 2 of the CT600A, select ‘Add new payment’ and enter the following information in box A25:

• The name of the participator or associate whose loan was repaid within this period.
• The amount repaid or the value of return repayments made. If this participator paid back their loan in multiple transactions, enter the total value of the repayments and return payments as one sum.
• The amount released or written off.
• The date of repayment, release or write-off. If this participator paid back their loan in multiple transactions, enter the date of the last repayment. Please note that the repayment date needs to be dated after the end of the accounting period but earlier than nine months and one day after the end of the accounting period in which the loan was made. You will not be able to add a repayment date in the future.
• The tax rate to apply to the loan. You can choose to apply the rate of 32.5% on loans taken before 6th April 2022 or the rate of 33.75% on loans taken on or after 6th April 2022.

If you’re unsure about how to complete Part 2 of the form, please speak to your accountant or HMRC.

Box A30 includes the total values of the amount repaid or return payments made, and the amount released or written off, and will be automatically populated by FreeAgent based on the information entered in box A25.

Box A40 includes the combined total of the amounts in box A30 which FreeAgent will add together automatically.

Box A45 includes the tax relief available at the end of this accounting period. FreeAgent will calculate this figure by applying the tax rate that you select in column E of box A25 to the amount in box A40.

Summary Information

You will need to enter how much all participators still owe to the company, and the value of any benefits that the company gave to these participators which the participators didn't repay the company for by the end of the accounting period, in box A75. For more information, please refer to HMRC’s guidance.

Box A75 should include those loans which were made in this accounting period, earlier accounting periods, and those deemed to be outstanding. If you’re unsure which amount to enter, please ask your accountant or HMRC.

Box A80 includes the tax payable for the accounting period after any relief for loans repaid is deducted. FreeAgent will calculate this figure by deducting the value of box A45 from box A20.

The amount calculated as tax payable in box A80 will be automatically added to box 480 on your CT600 form.

Recording your S455 tax liability in FreeAgent

FreeAgent will automatically calculate the outstanding loan and the amount of S455 tax due on the CT600A form based on the information you enter in Part 1 and Part 2 of the form. This amount will be included in the ‘Total amount due’ on the right-hand side of both the CT600 and CT600A. You can also view the amount of Corporation Tax due to HMRC on your ‘Tax Timeline’ on your FreeAgent Overview screen.

Please note that FreeAgent will not automatically post your S455 tax liability into your company’s year end accounts. As a result, the Corporation Tax liability on your trial balance and balance sheet will contain the amount of Corporation Tax due excluding your S455 tax liability.

If you would like to record your S455 tax liability in your accounts in FreeAgent, you can create journal entries to adjust your Corporation Tax figures in FreeAgent. For more information, please see this article.

Explaining S455 tax liability payments

When you make a payment for S455 tax to HMRC, you can explain the payment, once the relevant bank transaction has been imported into your FreeAgent account via a bank feed or uploaded from a bank statement, to an existing balance sheet category such as ‘Corporation Tax’. Alternatively, if you’d like to keep your S455 tax liability separate, you can set up a custom category.

When you receive a repayment from HMRC, you can explain the transaction once it has been imported into your FreeAgent account by choosing ‘Refund’ as the transaction ‘Type’ and the same category which you explained the tax payment to.

If you’re unsure about how to record these tax payments in your accounts, please ask your accountant.

You can then mark the liability as paid either at the bottom of the CT600 form or on the 'Tax Timeline'.

Disclosing a director’s loan on your Final Accounts report

If the company has given loans to participators who are also directors, you will need to manually enter the details of the loan as a ‘Director Advances Credits Note’ on your Final Accounts report.

For information on adding notes to your Final Accounts report and the details required to be disclosed in the ‘Director Advances Credits Note’, please see this article.