Introduction to this document

Certificate of annual interest and tax deducted

If your company pays annual interest to an individual it must deduct income tax first and provide a corresponding certificate.


Interest is annual if it relates to a debt capable of lasting for a year or more. Where a company pays such interest to an individual, for example, to a director whose loan account is in credit, it must deduct income tax at the basic rate from the payment. The company completes a Form CT61 to notify HMRC of the interest it has paid and the tax deducted each quarter. Where a CT61 is required it must be submitted to HMRC within 14 days of each the quarter ending on 31 March, 30 June, 30 September  and 31 December.

The company should provide the individual with a Certificate of Annual Interest and Tax Deducted. This can be done annually or more frequently, e.g. quarterly, if preferred.