Loan interest paid to director and CT61s

Loan interest paid to director and CT61s

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I think I know the answer to this question before I ask it, but here goes:  A director who is not a shareholder of the company loaned the company a sum of money and under the simple terms of the agreement he is entitled to loan interest on an annual basis.  When the company pays him the inteest it should do so after the deduction of income tax at the savings rate, thus paying 20% to HMRC following completion of a CT61 and the balance of 80% to the director.   Are there any circumstances under which the need to complete a CT61 and deduct tax at source would not be required?  I cannot identify any, but wonder whether members could comment on this.  The company is UK resident as is the director. 

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By gregsoley
14th Nov 2014 15:19

Short interest is excepted

A CT61 is generally required for "yearly interest", but not for "short interest" where the period of the loan is intended to be no longer than a year.

The circumstances you have described appear to fall within the "yearly interest" category unfortunately.

A search for "yearly interest" on the HMRC website my enlighten you further.

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