CT61 Tax: Deadlines, Filing, and Penalties

The CT61 tax return is the quarterly form a UK company uses to report and pay income tax it has deducted at source from yearly interest, royalties, and certain other recurring payments. The current deduction rate is 20%, matching the savings basic rate for the 2025–26 tax year.¹ Returns cover quarters ending 31 March, 30 June, 30 September, and 31 December, and the completed form and the tax must reach HMRC within 14 days of each quarter end.²

Which Payments Trigger a CT61

The core trigger is “yearly interest” arising in the UK, under Section 874 of the Income Tax Act 2007.³ Yearly interest broadly means interest on a loan capable of lasting more than 12 months, whether or not it actually runs that long. Short interest, such as interest on an overdraft or a loan with a term under a year, sits outside these rules.⁴

HMRC’s CT61 guidance lists several other recurring payments that also require deduction at the basic rate before being paid out:

Patent royalties and similar intellectual property licensing fees.
Alternative finance payments, meaning returns paid under Sharia-compliant or other arrangements that function like interest.
Manufactured payments made to compensate another party for a dividend or interest they would have received but for a stock-lending or repo arrangement.
Certain “relevant distributions” a company makes that are not ordinary dividends.⁵

When You Do Not Have to Withhold

Several common situations switch the duty off. Interest paid between two UK-resident companies does not require withholding where the recipient will be charged corporation tax on it, and the same applies to interest paid to or by a UK bank, including UK branches of foreign banks.⁶ Sections 930 and 931 set out a broader “excepted payment” framework that exempts a payer where it reasonably believes the recipient will be taxed on the income through other channels.⁷

Getting the call wrong hurts either way. Withhold when you shouldn’t, and the recipient’s cash is tied up until they reclaim the overpayment. Fail to withhold when you should, and your company is liable for the tax that ought to have been deducted, plus interest and possible penalties.

Quarterly Deadlines

Return periods end on 31 March, 30 June, 30 September, and 31 December. You must submit the return and pay the tax within 14 days, so the effective deadlines fall on 14 April, 14 July, 14 October, and 14 January.² Tax is payable “without demand,” meaning you calculate and pay on your own initiative rather than waiting for a bill.

If your accounting period ends on a date that does not coincide with a standard quarter end, you file an extra return covering the stub period.⁸ For an accounting period ending 31 October, that means the usual returns to 30 June and 30 September plus a short one covering 1 October to 31 October.

How to Get the Form and File It

The CT61 is still paper-based. You cannot download it. You request the form through HMRC’s online service, and a physical copy is posted to your registered address.⁵ Request it well before your deadline so postal delivery does not eat into your 14 days.

To complete it you need your company’s Unique Taxpayer Reference and details of every qualifying payment made during the quarter. For each one, record the gross amount, the tax deducted at 20%, and the net amount actually paid to the recipient. Post the completed return to the HMRC Accounts Office and pay the tax separately by electronic bank transfer, quoting the correct payment reference so HMRC can match the payment to the return. Any overpayment from a previous quarter can be offset against your current liability.

Limited Liability Partnerships

An LLP does not use the standard form. Instead, it writes to HMRC’s Self Assessment office at BX9 1AS, quoting the LLP’s Unique Taxpayer Reference and giving full details of the payments made and tax deducted.⁵

Giving the Recipient a Certificate

After you deduct tax, give the recipient a Form R185. It certifies the amount deducted, and the recipient needs it to reclaim any overpaid tax or to credit the deduction on their own return.⁹ Without it, the recipient will struggle to prove the deduction when claiming a repayment.

Payments Abroad and Double Taxation Treaties

If you pay interest or royalties to a recipient in a country with a UK double taxation treaty, the treaty may reduce the withholding rate below 20%, sometimes to zero. The recipient has to apply to HMRC for treaty relief before you can pay at the reduced rate. Individuals use Form DT-Individual;¹⁰ companies use Form DT-Company.¹¹

Until HMRC has processed the application, deduct at the full 20% and report it on the CT61 as normal. The recipient can then reclaim the excess. Applying a reduced treaty rate before you have HMRC’s written confirmation is a real compliance risk if HMRC later disagrees with the treaty position.

Interest and Penalties for Late Filing or Payment

HMRC charges interest on CT61 tax paid late at 7.75% per annum, the rate in effect from 9 January 2026.¹² The rate is set at the Bank of England base rate plus 4 percentage points and moves whenever the base rate moves. Interest runs from the day after the 14-day deadline until HMRC receives payment.

HMRC may also charge penalties for returns that are filed late or contain inaccuracies.² For a company making regular interest payments on private loans, setting a quarterly reminder about ten days before each deadline is the easiest way to stay clear of both.

Rate Change From April 2027

The deduction rate for CT61 purposes is the savings basic rate, which is 20% for both 2025–26 and 2026–27.¹ From 6 April 2027, the savings basic rate is legislated to rise to 22%. Qualifying payments made on or after that date will need the larger deduction, and CT61 filings for quarters in 2027–28 will reflect the higher rate. If you have long-term loan agreements running past April 2027, check now that the contractual terms accommodate the increased withholding.

1
GOV.UK. Income Tax Rates and Personal Allowances
2
GOV.UK. Notes on Completing Your CT61 Return
3
Legislation.gov.uk. Income Tax Act 2007, Section 874 – Duty to Deduct From Certain Payments of Yearly Interest
4
GOV.UK. SAIM9070 – Deduction of Tax: Yearly Interest
5
GOV.UK. Corporation Tax: Return of Income Tax on Company Payments (CT61)
6
Legislation.gov.uk. Income Tax Act 2007, Section 874 – Duty to Deduct From Certain Payments of Yearly Interest – Section: Subsection 3
7
Legislation.gov.uk. Income Tax Act 2007, Section 930 – Exception From Duties to Deduct Sums Representing Income Tax
8
GOV.UK. COM23135 – CT61 Returns
9
GOV.UK. Trusts and Estates: Certificate of Deduction of Income Tax (R185)
10
GOV.UK. Double Taxation: Treaty Relief (Form DT-Individual)
11
GOV.UK. UK Income Tax Relief at Source and Repayment (Form DT-Company)
12
GOV.UK. HMRC Interest Rates for Late and Early Payments