Pay your tax bill by Certificate of Tax Deposit

Overview

The Certificate of Tax Deposit (CTD)(CTD) Scheme allowed you to deposit money with HMRC and use it later to pay certain tax liabilities. Deposits with HMRC earn daily interest for up to 6 years.

From 23 November 2017 this scheme has been closed for new purchases, but we’llHMRC will continue to honour existing certificates until 23 November 2023. Any certificates remaining after this date should be promptly submitted to HMRC for a refund.

After that date HMRC will try to repay the balance of any certificate which remains unpaid and unclaimed. But if we cannot do so (for example, because we’re unable to contact the current certificate holder after reasonable effort) we’ll regard the balance as forfeited.

Who can use tax deposits

The scheme is open to:

• individuals
• individuals in a partnership -— to pay liabilities that apply solely to them
• companies
• personal representatives -— to pay liabilities of a deceased individual’s estate
• trustees -— to pay liabilities of the trust

Taxes you can pay with your deposits

You can use your deposits to pay liabilities for:

• Income Tax (Self Assessment)
• Class 4 National Insurance contributions
• Capital Gains Tax -— not including Annual Tax on Enveloped Dwellings-related Capital Gains Tax
• Corporation Tax -— only Series 6 certificates purchased in 1993 or earlier can be used
• Petroleum Revenue Tax
• Inheritance Tax

Tax liabilities under investigation by HMRC

A deposit could also be held against any of the tax liabilities that are under investigation by HMRC.

Making a deposit can help stop late payment interest beingcharges charged on the amount owed while itit’s is under investigation. Interest may be added to the value of the deposit depending on when the deposit was made.

Deposit made before the tax liability payment date

If you made 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 not attract late payment interest.

Deposit made after the tax liability payment date

If you make your deposit was made after the date the tax liability shouldwas havedue, been paid, interest will not be added to the value of your deposit. Late payment interest charges will only be added up to the date the deposit was made.

Interest on your tax deposits

You’ll get daily interest on tax deposits over £100,000 from the date shown on your CTDCertificate untilof theTax earliestDeposit. The interest will end on one of the:the following dates, whichever comes first:

• the due date of the tax liability you pay (in full or part) using the deposit
• the date you withdraw your deposit for cash
• the sixth anniversary of the date on your certificate

You can leave your deposits beyondfor longer than 6 years but no interest will be paid after that. Any certificates remaining after 23 November 2023 should be promptly submitted to HMRC for a refund.

Interest will be added to the value of your certificate when you use it to pay off a tax liability or withdraw your deposit. When you do either of these things you’ll get a letter confirming how much interest you have received.

To check the level of interest earned on a tax deposit you have made under the CTDCertificate of Tax Deposit scheme, contact HMRC’s CTDCertificate of Tax Deposit team.

Rates of interest

When you made a tax deposit, HMRC will have sent you a letter to confirm the current interest rate that applied. This interest rate will apply to your deposit throughout the first year.

Money on deposit for longer than 1 year

The interest rate applied in each subsequent year after the first year, is the rate that’s in force on the anniversary of the date shown on your CTD.Certificate of Tax Deposit.

For example, the rate of interest that’s in force on the second anniversary of your certificate will apply throughout the third year that your money is on deposit.

Current rates of interest

The following rates are effective from the 6 March 2009.

Deposits	Interest rate
Under £100,000	No interest
Over £100,000 held under 1 month	No interest
Over £100,000 held over 1 month	Tax rate: 0.75% Cash rate: 0.25%

Contact the CTDCertificate of Tax Deposit team for details of rates before March 2009.

When interest is not due

From 5 December 2008 there’s no interest due against deposits of less than £100,000. This includes weekly or monthly instalments you make that are less than £100,000 each.

Tax on interest you have received

Any interest you get on 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.

Make a deposit

From 23 November 2017, it is no longer possible to make a new deposit.

You cannot top up an existing certificate.

Pay tax with a deposit

To use your deposits to pay a tax liabilityliability, you must send your CTDCertificate of Tax Deposit with written instructions explaining how you want the deposit to be used.

If you have more than one liability you can specify the order you want them to be paid in. If you do not specify an order the oldest liabilities are paid first.

Send your certificate and instructions to HMRC’s CTDCertificate of Tax Deposit Team. Once the CTDCertificate of Tax Deposit Team have it, it takes 10 to 14 days to allocate the deposit to your liability.

Any certificates remaining after 23 November 2023 should be promptly submitted to HMRC for a refund. After that date HMRC will try to repay the balance of any certificate which remains unpaid and unclaimed.

But if we cannot do so (for example, because we’re unable to contact the current certificate holder after reasonable effort) we’ll regard the balance as forfeited.

If you do not use the full value of a certificate

If you only want to use a part of a certificate’s value to pay a tax liability you must specify what you want to happen with the rest of its value. You can either:

• withdraw the balance in cash
• get a Balance Certificate for use against a future liability (this certificate will have the same date as the original one)

If your tax liability is more than the value of your certificate

If the value of your certificate is not enough to meet your tax liabilityliability, 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 (including interest earned) contact HMRC’s CTDCertificate of Tax Deposit team.

Making late payments using a CTD Certificate of Tax Deposit

If you pay a tax liability after its due date using a CTDCertificate of Tax Deposit dated before the due datedate, you will not be charged late payment interest.

Pay another person or company’s tax

CTDCertificate of Tax Deposit are not transferable but you can use them to pay another person’s tax liabilities if you submit a written request to HMRC’s CTDCertificate of Tax Deposit Team.

A company can submit a written request to use tax deposits and pay the liabilities of:

• its holding company
• its subsidiary
• another subsidiary of its holding company

Confirmation of either the subsidiary and/oror holding companiescompanies, or both, is also needed to get the higher rate of interest.

Withdraw a tax deposit

To withdraw a deposit, send the CTDCertificate of Tax Deposit along with a written request —to includingHMRC’s Certificate of Tax Deposit team. You must also include details of the account you would like the funds paid into — to HMRC’s CTD team.into.

Bank details required:

• account name (for example Mr A N Other)
• account number
• account sort code
• bank or building society name

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Notify changes to HMRC

If the named trustees or executors change or the individual named on the certificate dies, we’ll need signed written authority to deal with the proceeds and amend the certificate. This must include:

• the full name of each trustee or executor named on the certificate
• their signatures confirming their agreement to the change
• the certificate’s reference number

Send the written authority to HMRC’s CTDCertificate of Tax Deposit Team.

Notifying you of changes to the scheme

On 22 November 2017, HM Treasury gave notice of the scheme’s closure.

If you lose a CTD Certificate of Tax Deposit

You must write to HMRC’s CTDCertificate of Tax Deposit Team to report a lost certificate. They’ll send you an indemnity form to complete and return.