If your company pays yearly interest to an individual, for example on a long-term loan from a director, it usually has to deduct income tax at 20% from each payment and report it to HMRC on form CT61. There are exceptions, so check whether the rules apply before you pay. The return and the tax are due within 14 days of the end of each return period. This guide explains when CT61 applies, the return periods, how to get the form, and what the lender does with the tax deducted.
Need help with a CT61? Ask us to prepare or check your CT61 return, or call us on Call 0161 832 4451.
When a company must deduct tax and file a CT61
A company must deduct income tax at the basic rate, currently 20%, from certain payments of yearly interest arising in the UK, and from some other payments such as annual payments and patent royalties. It accounts for the tax it has deducted on form CT61. HMRC’s guidance says the main case is a company paying interest to an individual or another non-corporate person.
There are exceptions. Interest paid to other UK companies, interest paid by a bank in the ordinary course of its business, and statutory interest on late payments are among the payments that do not need tax deducted.
The common case for owner-managed companies is interest on a loan from a director or shareholder. The company pays the lender the interest less 20% tax, pays the 20% to HMRC with its CT61 return, and gives the lender a certificate of the tax deducted.
CT61 return periods and deadlines
A return period lasts up to three months. It ends on 31 March, 30 June, 30 September, 31 December or at the end of the company’s accounting period. A return is required for every return period in which the company makes one of these payments. The return, and the tax, are due within 14 days of the end of the return period.
For a 12-month accounting period ending on 30 June, the return periods are 1 July to 30 September, 1 October to 31 December, 1 January to 31 March and 1 April to 30 June.
When the accounting period does not end on a quarter date, one quarter is split in two. For a 12-month period ending on 20 May, the return periods are 21 May to 30 June, 1 July to 30 September, 1 October to 31 December, 1 January to 31 March and 1 April to 20 May.
How to get a CT61 form
You cannot download form CT61. The company requests it online from HMRC, or we can request it for you as your agent. A limited liability partnership instead writes to HMRC (Self Assessment, HM Revenue and Customs, BX9 1AS), stating that it is an LLP, quoting its Unique Taxpayer Reference and giving details of the payment and the tax deducted.
What the lender does with the tax deducted
The company should give the lender form R185, which confirms the income tax deducted from the interest. The lender keeps it, because it is needed to support any claim for repayment. The lender includes the gross interest on their Self Assessment tax return and claims credit for the tax already deducted. If the tax deducted is more than the lender’s tax on that income, the difference is repaid or set against other tax due.
Charging interest on a loan to your own company
A director or shareholder who lends money to their company can charge interest. Whether the company can deduct the interest for corporation tax depends on the loan’s terms and purpose, so take advice before setting it up. The rate should be a commercial one that you can justify. Agree the rate and the terms in writing before interest is paid, and remember that every interest payment brings the CT61 obligations above.
When the director owes the company: directors’ loans
The rules are different when money flows the other way and a director borrows from the company.
- Corporation tax on loans not repaid. If the loan is not repaid within 9 months of the end of the company’s accounting period, the company pays corporation tax on the amount outstanding. The rate depends on when the loan was made: 35.75% for loans made on or after 6 April 2026, 33.75% for loans made from 6 April 2022 to 5 April 2026, and 32.5% for loans made from 6 April 2016 to 5 April 2022. The company can reclaim it once the loan is repaid.
- Benefit in kind over £10,000. If a director who is also a shareholder owes the company more than £10,000 at any time in the year, the loan is treated as a benefit in kind. For a beneficial loan, the company reports the benefit on form P11D and pays Class 1A National Insurance on it. If the company writes the loan off, Class 1 National Insurance is due instead.
- Interest below the official rate. If the director pays less than HMRC’s official rate of interest (3.75% from 6 April 2026), the difference is taxed as a benefit.
Questions about CT61
What is a CT61 form?
It is the return a company uses to report income tax it has deducted from payments such as interest, and to account for that tax to HMRC.
Can I download a CT61 form?
No. HMRC does not offer it as a download. The company requests it online, or its accountant requests it as agent.
When is the CT61 return due?
Within 14 days of the end of the return period. The tax deducted is due at the same time.
Sources
- HMRC, Corporation Tax: return of income tax on company payments (CT61), updated 13 February 2026.
- HMRC Company Taxation Manual, CTM35110 and CTM35120, updated 24 August 2026.
- HMRC Savings and Investment Manual, SAIM9070 (yearly interest), updated 7 April 2026, and HMRC form R185.
- HMRC Company Taxation Manual, CTM61505 (section 455 rates), updated 24 August 2026; GOV.UK, Directors’ loans and loans provided to employees: what to report and pay; HMRC official rates of interest, updated 6 March 2026.