What does CT61 apply to and what form do you need?
If your company or organisation pays interest, royalties, alternative finance payments, manufactured payments, relevant distributions or any similar recurring payment, you must generally make these payments after deducting Income Tax at the basic rate – currently 20%. You need to tell HMRC about these payments and pay the Income Tax that you’ve collected. Use form CT61 for companies.
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:
Self Assessment HM Revenue and Customs BX9 1AS
How do apply for CT61?
To get a CT61 you have to complete the e mail template
If the loan is from a family member and they are a non taxpayer they won’t be able to use form R85 but they will still be able to claim the tax back either by contacting HMRC 0845 366 7850 or by filing a self assessment return
Interest payments are not subject to National Insurance and can be a tax efficient of recieving part of your income from your business.
The income will need to be reported on your self assessment return.
The interest charges will be tax deductable by the Company.
This will make the you ‘the lender’ a secured creditor but you may have to take a secondary position behind your bank or other lenders or if other lenders are already lending you may need their permission to register a charge.