SimpleReturns

Company tax returns for marketing and creative agencies

Reviewed by Lee Jones, Founder · Updated 16 July 2026
The short answer

Every limited company in the UK has the same yearly job: send HMRC a Company Tax Return (a form called the CT600) with a set of accounts, even in a year it made a loss. Running a marketing, design, social or PR agency does not change that. Your version looks like this: retainers and project fees on the income side, and your tools, your running costs and the freelancers you bring in on the costs side. The one thing agencies most often get in a muddle over is client ad spend that runs through the company, so we will take that head on.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Company Tax Returns on gov.uk. Always rely on that over our summary.

What counts as your company's income?

Everything a client pays your company for your work is company income. A monthly retainer, a fixed project fee, a payment when a campaign goes live, a one-off strategy day: all of it lands in the company's account and belongs to the company first, not to you.

The good news is that Corporation Tax is not worked out on that total. It is worked out on profit: what came in, minus what it genuinely cost you to do the work. Say the company invoiced £70,000 and spent £15,000 running the business. The tax falls on the £55,000 that is left, not the £70,000.

Two rules catch people out. The return is due even in a quiet year: if HMRC has asked your company for a return, it must go in even at a loss, with nothing to pay. And filing late now costs £200 from the very first day.

What can your company claim?

One test decides it: was the money spent purely to run the business? If yes, it usually comes off the profit before tax. A company cost has to be for the business, though: a part-personal cost is not one you put a share of through the company, because that can create an extra personal charge (a "benefit in kind") instead. Here are the costs agencies genuinely have:

  • Software and subscriptions. The tools you pay for purely to do the work: design and editing software, a social scheduling tool, cloud storage, stock images, a paid email or project tool. These are the lifeblood of an agency, and they count.
  • Freelancers and subcontractors. When you bring in a designer, a copywriter or a video editor to help deliver a client job, their invoice is a cost of doing the work. One honest caveat: whether someone is genuinely self-employed, rather than really an employee, is a real question that affects your responsibilities and can look different for tax than it does on paper. If you are unsure, that judgement is worth an accountant's view.
  • Working from home. If you regularly work at home, the company can pay you a set £6 a week (£26 a month) towards the extra cost, with no receipts and no extra tax for you. It cannot pay your rent, mortgage or council tax.
  • Business insurance. Cover you buy purely because of the business, such as insurance in case a client says your work caused them a loss, passes the same purely-for-business test.
  • The everyday running costs. Your office or desk space, your business phone, and the fees for the accountant or bookkeeper who prepares the company's accounts.

Keep a clear record of each cost, and keep anything part-personal out of the company rather than putting a share through.

The trap: is recharged client ad spend your income?

This is the one that ties agencies in knots. You often pay for a client's ads or media, Google, Meta, a print buy, out of the company account, then bill it back to the client. So is that ad money your income, or not?

Here is the plain answer. If your company buys the ads in its own name and then charges the client for them, the client's whole payment is your company's income, and the ad spend your company paid out is a cost. Both sides go in the books. Because the spend comes straight back off as a cost, Corporation Tax lands only on the bit you kept, your fee or margin, not on the ad money passing through. So a £10,000 ad budget you paid for and billed back does not add £10,000 of tax: the £10,000 in and the £10,000 out cancel each other, and only your markup is taxed.

One thing to watch, though. That ad money still counts as part of your company's turnover, even though it is only passing through. Turnover is the headline "money in" figure, and if it goes over £90,000 across any rolling 12-month period, your company must register for VAT. Recharged ad spend can push you over that line faster than you expect, so keep half an eye on the total.

And an honest flag. There are more involved ways an agency can handle client money, where you are really just passing a payment along on the client's behalf rather than buying and reselling it yourself. Whether some of your recharges could be treated that way, and kept out of your own income, is a fiddly question that depends on exactly how you invoice and who the contract is with. If a big chunk of your money is pass-through client spend, that is a good one to put in front of an accountant rather than settle from a guide.

Company money is not your money

Quick reminder, because it trips up every new agency director. Once your company is paid, that money is the company's, not yours, until you take it out properly. A salary the company pays you through payroll is a company running cost, so it comes off the profit before Corporation Tax. A dividend is different: it is a share of what is left after Corporation Tax, so it does not lower the company's tax bill, and any tax on it is your own personal tax. Keeping that line clear is the whole discipline of a limited company, and the main thing that makes it different from being a sole trader.

What does filing look like with us?

You upload your company's bank statement and answer a few plain-English questions. We sort the year's money into the right places, apply the rules above, work out the profit and the Corporation Tax, and build both filings: the tax return for HMRC and the accounts for Companies House. You see every figure before anything is sent. It is free to start, and one payment of £99 covers both filings.

Common questions

Is recharged client ad spend taxed as my income?

If your company buys the ads in its own name and bills them back, the client's whole payment is company income and the ad spend is a cost. Because the spend comes straight off as a cost, Corporation Tax lands only on your fee or margin, not on the ad money passing through.

Does ad spend passing through affect VAT?

Yes. Recharged ad spend still counts towards your company's turnover, and if turnover goes over £90,000 across any rolling 12-month period the company must register for VAT. It can push you over that line faster than you expect.

Can I claim the freelancers I bring in?

When you bring in a designer, copywriter or video editor to help deliver a client job, their invoice is a cost of doing the work. Whether someone is genuinely self-employed rather than really an employee is a separate question worth an accountant's view.

Do my dividends lower the company's Corporation Tax?

No. A salary paid through payroll is a company running cost and comes off the profit before Corporation Tax. A dividend is a share of what is left after Corporation Tax, so it does not lower the company's bill, and any tax on it is your own personal tax.

Want your agency's return filed for you?

You upload your company's bank statement and answer a few plain-English questions. We sort the year's money into the right places, work out the profit and the Corporation Tax, and build both filings: the tax return for HMRC and the accounts for Companies House. You see every figure before anything is sent. Free to start, and one payment of £99 covers both filings.

Start your return

And if a big share of your income is pass-through client ad spend, or you are unsure whether a freelancer counts as self-employed, an accountant may be the better fit for that part, and that is an honest call to make.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.