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Interest income - Company accrual

Company has invested £2m cash. held under 12 month Deposit plan.

Period of investment from 1 Jan 2011 until 31 December 2011.

Interest receivable during period will be £82,000.  Paperwork provides that interest will be paid under deduction of income tax.  Therefore £16,400 will be deducted and £65,600 was actually received Jan 2012.  (no idea why this has been set up like this)

Company accounting period for the period to 30 June 2011.

I would ordinarily bring in £42,000 as gross interest receivable (non trading, D111 credit).  What about the credit?  Can I take credit for income tax not yet suffered?  or do I need to wait until the period in which the company suffers the tax. 


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22nd Feb 2012 13:37

Accrue gross

The tax is only deductible when the interest is paid, so you should accrue 181/365 of £82,000 gross interest income at 30 June 2011.  The £16,400 of income tax deducted in January 2012 will not be available for set off against the CT liability until the year to 30 June 2012

Thanks (1)
By blok
22nd Feb 2012 14:11


I thought as much but may I quote a client from yesterday...

"but thats not fair" !

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22nd Feb 2012 15:21

invested..with whom?

this sounds like a possible error by the deposit taker - LTD CO = GROSS interest.  

So providing the bank account or investment product application was as  xyz LTD then the institution has  been somewhat 'negligent'  Also creates a cashflow issue [ less receipts @ maturity ] and a tax issue having been paid net, not being recoverable for a number of 'years'  ie accounts for ye jun12 with returns completed/ filed in 2013


had a similar issue recently with a Bank and a LTD Co and they provided all sorts of rectification and compensation



[sorry for the shout = merely emphasis ]

Thanks (1)
By blok
22nd Feb 2012 16:15


I agree that this has been set up incorrectly.

At this point in life I just can't get worked up about this sort of thing anymore!


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