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CT61 query in Ltd

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Hi Guys


I need some advice on CT61. I understand if an individual lends to a company, the company has to deduct 20% income tax rate at source before paying the interest to the individual.

- Is this still the case if the term of the loan is less than 12 months ( i read somewhere this won't apply than  but not been able to confirm yet - my accountant not responded still)

- we as company if pay only annually the interest - is there sufficient to file this form only at time of payment? Does the the recipient has any further task to do ( we looking at possible investment from retired family member)

- if someone invest into our business and the interest is below £1000 treshold per year, would this count as "income from property on their filing" as I believe up to £1000 per year it is tax free... or is the £1000 income applies to all investment across all their income from stocks/bonds/etc?


Thanks in advance..






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The legislation provides that the interest payment due and CT61 return is based on a 3 month quarterly period of assessment. Where the accounting period is shorter than 3 months or the loan is shorter, an assessment for the relevant period is still required.

If the recipient does not declare the interest and pay any income tax due and the company has not deducted basic rate tax or submitted a CT61, then HMRC will look to recover the tax from the company - increasing the cost of the borrowing by 20% with no real hope of recovery if the capital has already been repaid. 

If the tax has been paid, then HMRC won't seek to recover, although the company may be penalised and will certainly be instructed to follow the correct procedures in future with the risk of further checks in future - all an admin burden.  Nil returns are not required so a CT61 is only due for a quarter that interest is actually paid.

Interest paid will not be within the remit of the £1,000 property or trading allowance. However, individuals do have a personal savings allowance of £1,000 for basic rate tax payers and £500 for higher rate tax payers (£0 for additional rate tax payers) so some interest can be received tax free. 

In addition, if other income is below the personal allowance, up to £5,000 can be received free of income tax from savings and investments which might be good news for a retired investor with only a small pension who could actually get up to £17,500 in total per annum completely tax free.





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