CT600 Adjustments Explained
Many limited company directors assume Corporation Tax is based directly on accounting profit, but HMRC requires several tax adjustments before taxable profit is calculated. This guide explains common CT600 adjustments including add-backs, capital allowances, disallowable expenses, and timing differences used in UK Corporation Tax calculations.
What Are CT600 Adjustments?
Your statutory accounts show accounting profit. HMRC wants taxable profit. The two are rarely the same.
Adjustments ensure:
- Disallowable expenses are added back
- Capital allowances replace depreciation
- Timing differences are corrected
- Reliefs and allowances are applied properly
This guide forms part of our wider Limited Company Accounts & CT600 Services for UK businesses.
What Are CT600 Adjustments?
From Accounting Profit to HMRC Taxable Profit
Accounting Profit
Net profit from your statutory financial statements.
Disallowable Expenses
Costs like entertaining, fines, or depreciation that aren't tax-deductible.
Capital Allowances
HMRC's version of depreciation for qualifying plant and machinery.
Tax Reliefs
Applying R&D credits, patent box, or trading losses brought forward.
Taxable Profit
The adjusted figure that determines your Corporation Tax bill.
CT600 Adjustment Process
From Accounting Profit to HMRC Taxable Profit
Accounting Profit
Net profit from your statutory financial statements.
Disallowable Expenses
Costs like entertaining, fines, or depreciation that aren't tax-deductible.
Capital Allowances
HMRC's version of depreciation for qualifying plant and machinery.
Tax Reliefs
Applying R&D credits, patent box, or trading losses brought forward.
Taxable Profit
The adjusted figure that determines your Corporation Tax bill.
Disallowable Expenses
These must be added back because they are not tax deductible:
Poor bookkeeping and mixed personal/business spending are common causes of CT600 adjustments.
Disallowable Expenses & Add Backs
Some expenses included within accounting profit are not fully deductible for Corporation Tax purposes and must therefore be added back when calculating taxable profit.
Common examples include:
Capital Allowances (AIA, WDA, FYA)
Instead of depreciation, HMRC allows:
100% deduction on qualifying assets
writing down allowance (18% or 6%)\
firstyear allowances on certain assets
XYZ Design Ltd buys:
- MacBook Pro: £2,200
- Office desk & chair: £650
- Printer: £300
Total qualifying expenditure: £3,150
AIA Claim (100%)\
All items qualify for AIA.
Tax deduction = £3,150
Tax saving @ 25%:
£3,150 × 25% = £787.50
Balancing Charges
If You Sell An Asset For More Than Its Tax Value, HMRC Adds A Balancing Charge.
Marginal Relief
For Profits Between £50,000 And £250,000, Marginal Relief Reduces Your Effective Tax Rate.
Timing Differences
Examples:
Common HMRC Triggers
HMRC May Enquire If:
Example CT600 Calculation
Turning Accounting Profit Into Taxable Profit
- Entertainment: +£1,200
- Depreciation: +£4,000
Computer equipment qualifies for AIA (100%):
- Capital allowance: -£3,000
Accrued expenses: -£800
62,000 + 1,200 + 4,000 - 3,000 - 800 = £63,400
This example shows how a company with £62,000 accounting profit ends up with £63,400 taxable profit after adjustments.
Every company's tax position is different, and Corporation Tax calculations should always be reviewed professionally before filing.
How RAIMS Ensures Accuracy
As ACCA-Qualified UK Online Accountants, We Help Limited Companies Ensure Their CT600 Calculations Are Accurate, Compliant, And Tax-Efficient.
Frequently Asked Questions About CT600 Adjustments
What is a CT600 adjustment?
Why is depreciation added back in a CT600?
What expenses are disallowable for Corporation Tax?
What are capital allowances?
Can bookkeeping mistakes affect Corporation Tax?
Do all limited companies need to file a CT600?
Most UK limited companies must file a CT600 Corporation Tax return with HMRC, even if the company has made no profit or no Corporation Tax is due.