A company may pay interest to a director, shareholder, investor or other lender, for example where an individual has lent money to the business. Depending on the nature of the payment and the recipient, the company may need to deduct Income Tax at the basic rate and account for it to HMRC on a quarterly CT61 return. The payment should also be supported by suitable loan terms, calculations and accounting records.
HOW THIS HELPS YOU
Calculate interest correctly
We can review the loan balance, rate, payment dates and supporting documentation. |
Apply withholding rules
The company's obligation to deduct and account for Income Tax is considered before payment. |
Meet quarterly requirements
Returns and payments are prepared for the relevant CT61 quarter where required. |
Keep records consistent
Interest expense, creditor balances, CT61 returns and personal tax disclosures should reconcile. |
Review the wider tax position
Interest may form part of a wider extraction strategy alongside salary, dividends and pension contributions, where appropriate. |
Use available allowances
We consider the recipient's tax bands and available savings allowances rather than assuming interest is tax free. |
THE ApC DIFFERENCE
CT61 compliance should not be considered in isolation. ApC can review the commercial basis for the loan, the company's Corporation Tax position and the recipient's wider personal tax position. Depending on the individual's other income, some interest may fall within the Personal Savings Allowance or starting rate for savings, but the availability and overall benefit must be checked case by case.
OUR SERVICE CAN INCLUDE
- Review of the loan arrangement and interest calculations
- Preparation of quarterly CT61 returns where required
- Reconciliation to company accounts and director loan records
- Personal tax reporting support for the recipient
- Wider remuneration and extraction planning where separately agreed
Ask ApC to review company interest before it is paid, so the documentation, withholding tax and planning all work together.