CT600 for IT Consultants: Complete Guide
IT consultants operating through a limited company have specific tax considerations. This guide covers everything from IR35 implications to claiming expenses for your tech business.
IT Consultant Company Basics
Why Use a Limited Company?
Most IT contractors operate via a limited company for:
| Benefit | Detail |
|---|---|
| Tax efficiency | Take salary + dividends |
| Professional image | Clients prefer Ltd companies |
| Limited liability | Personal assets protected |
| Expense claims | Wider range than employed |
| Pension contributions | Company can contribute directly |
Key CT600 Considerations
Your CT600 needs to reflect:
- Consulting/contracting income
- Business expenses
- Capital allowances (equipment)
- IR35 status (affects everything)
IR35 and Your CT600
What Is IR35?
IR35 determines whether you're genuinely self-employed or effectively an employee:
| Status | Tax Treatment |
|---|---|
| Outside IR35 | Pay Corporation Tax, take dividends |
| Inside IR35 | Pay tax as if employed |
Impact on Your CT600
Outside IR35:
- File CT600 normally
- Retain profits in company
- Take salary + dividends as planned
- Standard Corporation Tax applies
- Most income taxed as "deemed employment"
- Smaller retained profits
- CT600 may show lower taxable profit
- Consider 5% expense allowance
Who Determines IR35 Status?
| Client Type | Who Decides |
|---|---|
| Large/medium clients | Client determines status |
| Small clients | You determine status |
| End client uncertain | Seek professional advice |
Allowable Expenses
Direct Business Costs
| Expense | Notes |
|---|---|
| Professional subscriptions | BCS, IEEE, etc. |
| Training and courses | Job-related upskilling |
| Books and materials | Technical references |
| Software subscriptions | Development tools, IDEs |
| Cloud services | AWS, Azure for work |
| Conference attendance | Industry events |
Home Office Expenses
If working from home:
| Method | Calculation |
|---|---|
| Simplified | £6/week (no receipts) |
| Actual costs | Proportion of bills, mortgage interest |
Calculate business proportion: ``` (Rooms used for business ÷ Total rooms) × Time used ```
Claim proportion of:
- Council tax
- Utilities (gas, electric, water)
- Mortgage interest
- Insurance
- Repairs
Travel and Subsistence
| Journey Type | Deductible? |
|---|---|
| Home to client site | Yes (temporary workplace) |
| Between client sites | Yes |
| Home to permanent office | No |
| Travel to training | Yes |
Equipment and Technology
| Item | Treatment |
|---|---|
| Laptop | AIA (immediate 100% relief) |
| Monitors | AIA |
| Keyboard/mouse | AIA |
| Desk and chair | AIA |
| Mobile phone | AIA or expense if cheap |
| Broadband | Proportion if home-based |
Capital Allowances for IT Equipment
Annual Investment Allowance (AIA)
Most equipment qualifies for 100% immediate relief:
Example:
- New laptop: £1,500
- Monitors: £800
- Desk setup: £400
- Total AIA claim: £2,700
Writing Down Allowance (WDA)
If exceeding AIA limit (currently £1m, rarely relevant):
- 18% per year on main rate pool
- 6% on special rate items
Claiming in Your CT600
Capital allowances go in Box 315, reducing your taxable profit.
Professional Development
Allowable Training
| Type | Deductible |
|---|---|
| Existing skill enhancement | Yes |
| New related technology | Yes |
| Professional certification | Yes |
| Complete career change | No |
- AWS certification: Yes
- New programming language: Yes
- Project management course: Yes
- Learning accounting: No (different trade)
Conferences and Events
Fully deductible if business-related:
- Entry fees
- Travel costs
- Accommodation
- Subsistence (reasonable)
Insurance
Common Policies
| Insurance | Treatment |
|---|---|
| Professional indemnity | Fully deductible (often required) |
| Public liability | Fully deductible |
| Business contents | Fully deductible |
| Key person insurance | Usually not deductible |
| Private medical | Benefit in kind if for you |
Pension Contributions
Company pension contributions are a major tax benefit:
| Aspect | Detail |
|---|---|
| Corporation Tax | Fully deductible expense |
| Personal tax | No tax when company pays |
| Annual limit | Usually £60,000/year |
| Carry forward | Unused allowance from past 3 years |
- Company profit: £80,000
- Pension contribution: £40,000
- Corporation Tax savings: £40,000 × 25% = £10,000
- Plus no personal tax on £40,000
Dividend Strategy
Optimal Salary/Dividend Split
Most IT contractors take:
- Small salary (NI threshold level)
- Remainder as dividends
- Salary: ~£12,570 (personal allowance level)
- Dividends: Remainder after Corporation Tax
CT600 Impact
Salary is deductible expense before Corporation Tax. Dividends are paid from after-tax profits.
Common Expenses Summary
Definitely Deductible
| Expense | Typical Annual Cost |
|---|---|
| Accountancy fees | £500-2,000 |
| Professional indemnity | £200-500 |
| Software subscriptions | £500-2,000 |
| Training/certification | £500-3,000 |
| Mobile phone | £300-600 |
| Broadband (business %) | £200-400 |
| Professional memberships | £100-300 |
| Bank charges | £50-200 |
Partially Deductible
| Expense | Business Proportion |
|---|---|
| Home office | Based on calculation |
| Vehicle (if used) | Business mileage % |
| Meals with clients | 100% (if business purpose) |
Not Deductible
| Expense | Reason |
|---|---|
| Everyday clothing | Not specialist |
| Commuting (permanent) | Private expense |
| Entertainment (personal) | Not business |
| Fines | Public policy |
Using TinyTax
TinyTax handles IT consultant CT600s:
- Enter consulting income
- Add all business expenses
- We calculate capital allowances
- Corporation Tax computed
- Ready to submit
Verification Checklist
Before submitting, verify:
- All consulting income included
- Expenses properly categorised
- Home office calculation documented
- Capital allowances claimed on equipment
- Travel expenses have business purpose
- Training is trade-related
- IR35 status considered
- Figures match bank records
TinyTax makes CT600 filing simple for IT consultants. Start your filing