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Posted Mon, 17 Jan 2022 14:31:12 GMT by David Kammerling
I have made a unsecured loan directly to a limited company. I have not used a peer to peer platform. Interest on the loan is earned, and is due to be paid, monthly. Due to cashflow problems during Covid, the company did not make the monthly interest payments to my bank account when they fell due. The company is aiming to catch up with the missed interest payments, but now these catch up payments will be received in my bank account in a later tax year to when they were earned. In relation to my self assessment, should I: a) report the interest in the tax year it was earned even though it wasn't paid to me then. In which case, what happens if they fail to ever pay the missed interest, as I will have already paid Income Tax on it? b) or, report the interest in the tax year it actually arrives in my bank account. In which case I will be pushed into a higher Income Tax band than I would have done had the interest payments been made on time. In either scenario, on which section of my self assessment should I report the interest? Thank you. David
Posted Tue, 18 Jan 2022 11:53:50 GMT by HMRC Admin 17

Please see guidance here on when interest payments should be reported :

Savings and Investment Manual    .

Thank you.
Posted Tue, 18 Jan 2022 12:56:07 GMT by David Kammerling
Thank you, that was very helpful and addressed my first question perfectly. Could I kindly also ask for a response to my question about where to report any interest received under this arrangement in my self assessment. As the interest does not have tax taken off, I am currently inclined to report the interest in box 3 of the Additional Information form, given that the Additonal Informtion notes refers to "Other UK income: ... This includes ... interest from ... loan notes ... issued by UK companies", and further "If the interest did not have tax taken off, put this amount in box 3". Is this correct? Thanks again.
Posted Wed, 19 Jan 2022 14:12:41 GMT by HMRC Admin 17

Yes this would be correct. 

Thank you.

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