Restitution tax is a 45% Corporation Tax charge on restitution interest: interest HMRC pays a company on a claim that tax was paid under a mistake of law or was unlawfully collected. It is reported on CT600K, the restitution tax supplementary page of the Company Tax Return. Very few companies ever need it. This guide explains when you do, how to complete the page in Tax Optimiser, and what every box from K1 to K35 means.
When a company needs a CT600K
File a CT600K, and tick box 141 on the CT600, if HMRC paid the company restitution interest in the return period. The rules are in Part 8C of the Corporation Tax Act 2010. Broadly, interest is restitution interest when:
- the company claimed restitution from HMRC for tax paid under a mistake of law, or unlawfully collected;
- the claim has been finally decided by a court or settled by agreement; and
- the interest is not simple interest paid at a statutory rate.
The page is for accounting periods starting on or after 1 April 2015. Ordinary repayment interest from HMRC is not restitution interest and does not go here.
How the charge works
Restitution interest is taxed at 45%, whatever the company’s main rate. It is charged on its own: losses, group relief, capital allowances and other reliefs cannot reduce it, and the interest is not also charged to Corporation Tax as ordinary income.
HMRC normally withholds the 45% when it pays the interest. The amount withheld is credited on the CT600K, so in most cases nothing more is due and the page simply reports what happened. If less than 45% was withheld, the balance is payable with the company’s Corporation Tax.
Completing the CT600K in Tax Optimiser
Open the period’s Corp Tax Calculations workspace and choose Restitution Tax in the Sections menu. If the period of account is longer than 12 months it is filed as two returns, each with its own CT600K; use the Return 1 and Return 2 buttons to switch between them, and enter the interest in the return for the period in which it arose.
Step 1 — Enter the interest by financial year
The table has one row for each financial year the return falls in (a financial year runs from 1 April to 31 March). A return that sits inside one financial year has one row. A return that crosses 31 March has two, and you split the interest between them. Enter the interest in whole pounds. The rate and the tax for each row are worked out for you.
Step 2 — Enter the tax already withheld
Enter the tax HMRC deducted when it paid the interest in K25, in pounds and pence. It can’t be more than the total restitution tax in K20.
Step 3 — Remove the interest from taxable profits
Tax Optimiser does not adjust the computation for you. If the restitution interest is in the profit and loss account, deduct it in the computation so that it is not taxed twice.
Step 4 — Save and check the return
Click Save. As soon as there is an entry, Tax Optimiser:
- ticks box 141 and puts the restitution tax now payable in box 527, even when it is nil;
- adds box 527 to boxes 525 and 526 to give the self-assessment total in box 528;
- adds a restitution tax line to the Corporation Tax page of the computation, and a Restitution tax page showing the calculation;
- adds any restitution tax still payable to the last payment shown for the return;
- lists the completed form under Supplementary pages on the CT600 Document card, where you can view or download it.
A worked example
A company receives £50,000 of restitution interest in a return that falls in one financial year, and HMRC withheld £10,000. K10 is 50,000. The tax in K20 is 50,000 × 45% = £22,500. K25 is 10,000, so K35 and box 527 are £12,500. If box 525 is £37,500, K30 is 37,500 + 22,500 − 10,000 = £50,000, and box 528 is also £50,000.
CT600K box by box
Boxes K1 to K4 — Company information
The company name, tax reference and the period covered by the page. Tax Optimiser copies them from the return; the period cannot exceed 12 months.
Box K5 — Self-assessment of tax payable before restitution tax
The figure in box 525 on the CT600. Filled in for you.
Box K10 — Restitution interest
The total restitution interest for the return, in whole pounds: the sum of column B of the table.
Box K15 — The financial year table
Column A is the financial year, column B the interest arising in it, column C the rate (45%) and column D the tax. Row 1 is the financial year in which the return starts. Row 2 is used only when the return ends in the following financial year.
Box K20 — Total restitution tax
The total of column D.
Box K25 — Tax already withheld
The tax HMRC deducted from the interest when it was paid. It cannot exceed K20.
Box K30 — Self-assessment of tax payable after restitution tax
K5 plus K20 minus K25.
Box K35 — Restitution tax now payable
K20 minus K25. This figure goes to box 527 on the CT600.
What Tax Optimiser checks, and what it does not do
Before filing, Tax Optimiser checks that interest has been entered, that the tax withheld is not more than the total tax, that a second financial-year row is only used when the return crosses 31 March, and that the period starts on or after 1 April 2015.
It does not decide whether a payment is restitution interest, and it does not remove the interest from the profits charged to Corporation Tax. Take the figures from HMRC’s payment notice.
Common questions
What is the CT600K?
The CT600K is the supplementary page of the Company Tax Return for restitution tax. It reports restitution interest received from HMRC, the 45% tax on it and any tax HMRC withheld. Box 141 on the CT600 is ticked to show it is attached.
What is restitution interest?
Interest paid by HMRC under a final court judgment or a final settlement of a claim that tax was paid under a mistake of law or unlawfully collected, where the interest is not simple interest at a statutory rate.
What rate is restitution tax charged at?
45% of the restitution interest. Losses and other reliefs cannot be set against it.
Do I still file a CT600K if HMRC withheld all the tax?
Yes. The page reports the interest and the tax withheld. Box 527 is then nil, but box 141 is still ticked and the page is still filed.
Where does restitution tax go on the CT600?
The amount still payable goes in box 527, and box 528 is the total of boxes 525, 526 and 527.
Is restitution interest also charged to Corporation Tax?
No. Interest charged to restitution tax is left out of the profits charged to Corporation Tax, so remove it in the computation if it is included in the accounts profit.
Where to go next
- Corporation Tax in Tax Optimiser — the full journey from trial balance to filed return.
- CT600 box-by-box guide — boxes 525 to 528 on the main return.
- HMRC’s Company Tax Return guide — the official notes for the supplementary pages.