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Under the Certificate of Tax Deposit scheme you can make deposits with HM Revenue & Customs (HMRC) for later use to pay off certain tax liabilities. These deposits attract interest on a daily basis for up to six years, and can be withdrawn at any time.
This guide explains how the scheme works and lists the taxes covered. It also sets out how to make a tax deposit, how to use a deposit to pay a tax liability and how to withdraw deposits from HMRC.
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Under the Certificate of Tax Deposit scheme you can deposit money with HMRC and use it later to pay your liabilities for certain taxes. For a list of the taxes covered by the scheme, see the section 'Taxes you can pay with your deposits'.
Your tax deposits with HMRC attract interest on a daily basis for up to six years. For more information, see the later section 'Interest on your tax deposits'.
Every time you make a deposit to HMRC, you will be issued with a Certificate of Tax Deposit by HMRC. You must keep these certificates, as you'll need them later to use your deposits to pay a tax liability or to withdraw them.
The scheme is open to:
You can only use your tax deposits to pay your liabilities relating to the following taxes:
Note that tax deposits can't be used to pay PAYE (Pay As You Earn), or Corporation Tax liabilities, other than those listed above.
You can make a tax deposit to be held against a tax liability that is under investigation by HMRC. Using a deposit in this way can help stop late payment interest accruing on the amount owed while it's under investigation. Interest may be added to the value of the deposit depending on when the deposit was made.
If you make a deposit before the due date of the tax liability under investigation interest will be added to the value of the deposit. The element of tax due that is covered by the deposit will be treated as being paid on its due date and will therefore not attract late payment interest.
If your deposit is made after the date the tax liability should have been paid interest will not be added to the value of your deposit. However late payment interest charges will only be added up to the date the deposit was made.
You'll get interest on the value of your tax deposits on a daily basis from the date shown on your Certificate of Tax Deposit until the earliest of the following three dates:
You can leave your deposits with HMRC for periods beyond six years, but no further interest will be paid on them after that point.
Any interest that has accrued will be added to the value of your certificate when you use it to pay off a tax liability or when you withdraw your deposit. When you do either of these things, HMRC will send you a letter to confirm the exact amount of interest that you've received.
When you make a tax deposit, HMRC will send you a letter to confirm the current interest rate that applies. This interest rate will apply to your deposit throughout its first year.
If you keep your money on deposit for longer than a year, then the interest rate applied in each subsequent year is the rate that's in force on the anniversary of the date shown on your Certificate of Tax Deposit.
For example, the interest rate that's in force on the second anniversary of your certificate will apply throughout the third year that your money's on deposit.
Any interest your deposits attract is paid gross (without tax deducted at source). You must therefore treat all of this interest as part of your income for tax purposes when completing your annual tax return.
From 5 December 2008 there's no interest due against deposits of less than £100,000. This includes any weekly or monthly instalments that are less than £100,000 each.
You can use HMRC's interest calculator tool to check the level of interest accrued against a tax deposit you have already made under the Certificate of Tax Deposit Scheme.
Your first tax deposit must be for a minimum of £500.
The minimum for subsequent deposits is the lower of:
There is no maximum amount for a tax deposit.
Each time you make a deposit you will be given a new certificate. You can't top up an existing certificate.
HMRC recommends that you make your deposits electronically. Paying electronically:
You can use your bank or building society to pay by CHAPS.
CHAPS enables you to tell your bank or building society to make an immediate deposit that will reach HMRC on the same day provided you initiate the deposit within the time limit specified by your bank (usually between 9.00 am and 3.00 pm). CHAPS deposits can be more expensive than other methods but may be of benefit if you're making very large deposits.
To make the deposit you will need to let your bank or building society have HMRC's bank account details and then send a letter to HMRC to confirm the details of your deposit.
Bank working days are normally Monday to Friday excluding bank holidays.
|Sort Code||Account number||Account name|
|08 32 10||12001039||HMRC Cumbernauld|
Please take care if you need to enter our bank account details. If you make a mistake with the sort code or account number there may be a delay in issuing your certificate.
You will also need to provide your bank or building society with the following reference details:
This will ensure that HMRC can issue your certificate without delay.
Once you've sent your payment you'll then need to send HMRC a confirmation letter (see below).
Your letter of confirmation to HMRC must contain the following information:
Send your letter to:
HM Revenue & Customs
St Mungo's Road
The date on your Certificate of Tax Deposit will be the date your deposit is credited to HMRC's bank account.
HMRC highly recommends that you make your tax deposits electronically using one of the methods described above.
However if paying by post your cheque should be made payable to 'HM Revenue & Customs only - CTD'
Your cheque should be accompanied by a covering letter including the following information:
Send your cheque and covering letter to:
HM Revenue & Customs
The date on your Certificate of Tax Deposit will be the date HMRC receives your cheque.
If you want to use your tax deposits to pay a tax liability, you must send your Certificate of Tax Deposit to HMRC along with written instructions explaining clearly how you want the deposit to be used.
If you have more than one liability to pay, you can specify the order in which you want them to be paid with your certificate. If you don't specify an order, HMRC will start with the oldest liabilities first.
Send your certificate and instructions to the following address:
HM Revenue & Customs
St Mungo's Road
If your instructions are to use only a portion of a certificate's value to pay a tax liability, then you must specify what you want to happen with the remainder of its value. HMRC can either:
Note: HMRC will not leave any balance due as a credit on your tax records.
If the value of your certificate isn't sufficient to meet your tax liability, then you need to arrange to pay the shortfall immediately to avoid or minimise late payment penalties and interest charges.
To get an up-to-date valuation of your certificate, taking into account any interest that may have accrued, please contact HMRC's Certificates of Tax Deposits team - see the final section of this guide for contact details.
If you pay a tax liability later than its due date using a Certificate of Tax Deposit dated before the liability's due date, you won't be charged late payment interest.
Certificates of Tax Deposit are not transferable. However, you can use them to pay another party's liabilities if you submit a written request to HMRC's Certificates of Tax Deposits team - see the final section of this guide for contact details.
Interest on a deposit used to pay against another person's tax liability will be at the lower cash rate.
Note that without having to submit a written request, a company may use its tax deposits to pay the liabilities of any of the following:
You can make a full or partial withdrawal of your tax deposits (including any interest that has accrued) at any time. HMRC will usually make these repayments within 12 working days.
To withdraw a deposit, send the relevant Certificate of Tax Deposit and a written request to HMRC's Certificates of Tax Deposits team - see the final section of this guide for contact details.
HMRC will make a repayment to you using the CHAPS system or by payable order - you will need to let HMRC know your preferred option. The payable orders are made out to the depositor and sent to the address shown on your written request for withdrawal.
For the purposes of calculating the interest due on deposits being withdrawn, the date of withdrawal is deemed to be either:
Where there are changes to named trustees or executors HMRC will need signed written authority, which must include:
Send the written authority to HMRC's Certificates of Tax Deposits team - see the final section of this guide for contact details.
If an individual named on the Certificate of Tax Deposit dies, HMRC will need signed written authority to deal with the proceeds and / or amend the Certificate. This authority must include:
Please send your written authority to HMRC's Certificate of Tax Deposit team. You can find their contact details in the final section of this guide.
HMRC require this information before they make any allocation or repayment from the deposit.
In the event of changes to the operation of the scheme - such as the addition or removal of taxes from the list of liabilities covered - details will be published:
HMRC will continue to accept deposits until HM Treasury gives notice that it is terminating or temporarily suspending the Certificate of Tax Deposits Scheme:
If you lose a Certificate of Tax Deposit, you must tell HMRC's Certificates of Tax Deposits team in writing - use the address in the next section.
They will send you an indemnity form to complete and return. You can use this form to request that HMRC take one or more of the following steps:
Once HMRC has issued you with an indemnity form, your original Certificate of Tax Deposit will no longer be valid. If you subsequently find it, please send it to the Certificates of Tax Deposits team who will destroy it.
The Certificates of Tax Deposits team can be contacted by phone on Tel: 01236 785202.
The postal address is:
HM Revenue & Customs
St Mungo's Road