Third party loans with an individual (not a recognised lender)

Individuals
If the company enters into a loan agreement with an any individual (e.g., a director, family member, friend, investor, etc) that is not a recognised lender (mortgage company, bank, building society etc) and interest is paid from the company to the individual as part of the loan agreement a CT61 return will need be submitted and tax deducted from the interest payment and paid to HMRC. This applies to UK resident and non-UK resident individuals.

A R185 will also need to be completed by the company and issued to the individual so they can declare the interest received, with the tax deducted from the payment can be included on their UK personal tax return.

Non-UK Companies
If your UK limited company is paying interest to an overseas company the CT61 process will apply.

Double Tax Treaties
There are various Double Tax Treaties (DTA) in place between the UK and other countries that reduce the tax due to HMRC in the UK. To utilise the relevant DTA an exemption must be applied for directly to HMRC in advance of any interest being paid. Further information regarding the Double Taxation Treaty Passport Scheme (DTTPS) can be found on the following link: Double Taxation Treaty Passport Scheme - GOV.UK

In all cases of interest being paid to individuals or Non-UK companies the relevant CT61 return will need to be submitted to HMRC. If the exemption has been granted, the applicable exemption code can be included on the CT61 return.

Further information regarding the filing requirements can be found here: Corporation Tax: return of Income Tax on company payments (CT61) – GOV.UK (www.gov.uk)

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