Taxation due on interest charge for director loan account where director has no taxable income ?

[3point14]

I know that lending money to a company and charging interest requires the completion of a CT61 form quarterly and that 20% of the interest due must be paid to HMRC but this is notionally a 20% tax on income.

What happens if the person lending the money to the company doesn't have any taxable income or has taxable income under their tax free allowance ?

Does the company still need to pay HMRC 20% ?

Does the individual need to reclaim that 20% via a SA101 Tax Return ?

[bd6759]

It is not “notionally a tax on income.” The company is withholding tax and giving it to HMRC. There is nothing notional about it.

The company gives the lender a certificate showing the gross interest and tax deducted which the lender enters on their tax return. The tax can be repaid if there is no liability.