HMRC link<\/a>. Or as your tax agent we can request it from HMRC. If you are an LLP you must send a letter and clearly state that you are a LLP and quote your Unique Taxpayer reference with details of the payment made and the tax deducted to:<\/p>\n\n\n\nSelf Assessment<\/p>\n\n\n\n
HM Revenue and Customs<\/p>\n\n\n\n
BX9 1AS<\/p>\n\n\n\n
Claiming a Tax Credit for Withholding Tax<\/h2>\n\n\n\n
To claim a tax credit for withheld tax, you must complete a personal tax return. Additionally, you must include the amount of interest received and the tax withheld on the form. If your total tax bill for the year is less than the tax withheld on the interest, you will be entitled to a tax refund for the difference. To claim the refund, you must complete a personal tax return and include the amount of tax withheld on the form. You will also need to attach a copy of the form R185 showing the amount of interest paid and the amount of tax withheld.<\/p>\n\n\n\n
The Law when companies pay interest and CT61<\/h2>\n\n\n\n
The law governing CT61 Returns can be found in Part 15, Chapter 15 of the Income Tax Act 2007 (ITA). This law applies to companies that are either a body corporate, an unincorporated association, a UK-authorized unit trust or open-ended investment company, or a building society, local authority, or deposit-taker. However, it does not apply to partnerships. CT61 Returns cover annual payments, interest, and alternative finance payments made by companies. Part 15, Chapters 2 and 4 of the ITA covers interest and alternative finance payments made by building societies. Interest and alternative finance payments made by banks and other deposit-takers are covered by Section 851 of the ITA. Banks are defined in Section 991 of the ITA, and deposit-takers are defined in Section 853 of the ITA.<\/p>\n\n\n\n
Certain payments may be made without withholding tax under Part 15, Chapter 11 of the ITA. CT61 Returns may also be used for payments of relevant distributions by a company or the principal company of a group within Part 12 of the Companies Act 2010 (CTA 2010). Relevant distributions, as defined in The Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006, include manufactured dividends representative of a dividend falling within Section 785(1)(a) or (b) of the CTA 2010.<\/p>\n\n\n\n
Q&A<\/h2>\n\n\n\n
Q: Can I claim a tax credit for withheld tax if I am a non-resident of the UK?<\/p>\n\n\n\n
A: Yes, you can claim a tax credit for withheld tax if you are a non-resident of the UK. However, you will need to complete a non-resident tax return and include the amount of interest received and the tax withheld on the form. If your total tax bill for the year is less than the tax withheld on the interest, you will be entitled to a tax refund for the difference.<\/p>\n\n\n\n
Conclusion<\/h2>\n\n\n\n
Receiving company interest can be a useful source of income for business owners and investors in the UK. And the interest payable by the company is a deduction for corporation tax. However, it is important to understand the tax implications of these payments, including the requirement for withholding tax (tax at source) and the need to file a form CT61 with HMRC. By following the rules and processes outlined in this article, you can ensure that you correctly report and pay the necessary taxes on your interest income. If you have any additional questions or need help navigating the process of receiving interest from companies, don’t hesitate to reach out to us. Our tax experts help you understand your obligations and ensure that you comply with UK tax laws. Complete the form below, and we will be in touch.<\/p>\n\n\n
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