Flat-management, RTM and freehold companies: accounts and the CT600

The route supports companies limited by shares and companies limited by guarantee. The latter have no share capital field.

The company's own figures

The accounts are the company's accounts, not the building's. Enter what the company itself owns, owes, earns and spends:

• Ground rent the company is entitled to as freeholder, which is its own income.
• Interest earned on money that belongs to the company, which is taxable income of the company.
• The freehold, if the company owns it and carries it as a fixed asset.
• The company's own bank balance, its own debtors and its own creditors.
• Share capital, where the company is limited by shares (for example twelve £1 shares for twelve flats). A company limited by guarantee has none, and the wizard does not ask for it.
• Costs the company pays for itself, such as its Companies House fees.

Service charges and reserve funds

Section 42 of the Landlord and Tenant Act 1987 applies to qualifying variable service charges under the lease, including relevant reserve or sinking funds. It does not automatically put every fixed charge or receipt into a trust, and statutory landlord exclusions can apply. HMRC's guidance says contributions held on that trust fall outside Corporation Tax and are not the company's income, and that money held on trust is not the company's own asset. It also says the treatment depends on what the lease specifies: an arrangement outside section 42, for example where the lease leaves the residents to arrange services themselves, is treated differently.

We do not decide the lease position for you. If the money is held on trust, keep it out of the company's turnover, out of its cash and out of its reserves, and do not enter the reserve fund as retained earnings. If you are not sure whether your lease brings section 42 into play, check the lease or ask your managing agent or an accountant before you file. HMRC explains the trust in TSEM5730 and the Corporation Tax position in PIM1075.

When the company is dormant

Once trust money is left out, many management companies have had no accounting transactions of their own in the year: no income, no expenses, nothing bought or sold. That company is dormant for Companies House, and you select Dormant on the eligibility step. The balance sheet is then small or nil: the share capital and a matching amount of cash for a company limited by shares, or nothing at all for a guarantee company. Income of the company's own, such as ground rent or bank interest, may mean the company is not dormant for Corporation Tax, and each amount is entered in the field that matches its nature: rent in the property income fields, bank interest in Interest Received. Earning interest does not by itself make the company a trading or property business. GOV.UK explains when a company is dormant for Corporation Tax.

The Corporation Tax return

HMRC decides whether it wants a Corporation Tax return by sending a notice to deliver one. Many management companies never receive one. If HMRC has not asked for a return for the period, choose Companies House only on the review page and file the accounts alone. If HMRC has asked, file the CT600 as well: a dormant company files a nil return, and a company with its own income pays Corporation Tax on it in the normal way.

Box 4 of the CT600 is the type of company. HMRC's Company Tax Return guide lists code 7 for a property management company and points to its own manual, BIM24782, for what that means. The company's legal form does not decide the answer, and neither do we: it is a question about your company's activities and it is yours to answer. For an active company, answer No to the special-rules question on the first step, then select Property management company under Company tax type in Financial data, in Profit & loss immediately above Corporation tax. In separate-figures mode, choose on the Return 1 tab (CT600 1). Return 2 shows the same choice, locked. One company type applies to both returns of a long period. The dormant journey does not offer the code 7 choice yet. Follow the box 4 steps.

Where to enter it

You determine which money belongs to the company and which is held on trust. These instructions do not decide that treatment.

Company-owned income

Financial data → Profit & loss

Use the income row matching your prepared classification. Do not include trust money merely because it passed through a bank account.

Company-owned expenses

Profit & loss → relevant expense rows

Enter the company’s costs in their prepared categories, once.

Company’s closing assets and liabilities

Balance sheet

Use the company-owned closing balances, with prior-year comparatives where requested.

Guarantee-company reserves

Retained earnings

Use prepared accumulated reserves. The summary is headed Members’ funds and no Share capital entry is shown for a CLG.

Add the company and we read its type from Companies House. Answer the dormancy and special-regime questions for the company’s actual position. A flat-management or RTM label alone does not select the box 4 answer. Active companies can make the code 7 declaration on Financial data. Choose the applicable option under What the company does. On the Financial data step enter the company's own figures only. For a company limited by guarantee the balance sheet shows Members' funds and no share capital rows. Choose the filing destination under What are you filing? in step 1 and check it again before submission.

This article is general guidance, not tax or legal advice. The trust rule is in section 42 of the Landlord and Tenant Act 1987, and HMRC's treatment is in TSEM5730, PIM1075 and BIM24782.