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Topic: Profit extraction

annual certificate of interest
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Annual certificate of interest

Annual certificate of interest

If your company pays you interest for lending it money, it must deduct income tax first and provide you with a certificate to show this.

certificate

The interest can be paid or credited to the director’s loan account on a regular basis to be drawn against later. Generally, the company has to deduct income tax at the rate of 20% from interest paid to the director. The company has to tell HMRC how much interest it has paid each quarter (using a Form CT61) and pay over any tax deducted. This form needs to be completed and submitted to HMRC within 14 days of the quarters that end on 31 March, 30 June, 30 September  and 31 December. So quarterly is probably a convenient time to put the transaction through the company’s books.

In order to help the director with their tax affairs at the end of the tax year the company issues an Annual Certificate of Interest.

 

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