Bank interest paid - expense, not income?

Hi, I am doing my CT600 / combined company accounts and tax return. I am copying over numbers from the Profit & Loss page in quickfile into the Profit and loss page on I have to fill in the following:
Other income
Cost of raw materials and consumables
Staff costs
Depreciation and other amounts written off assets
Other charges

I am using Quickfile’s “General Purchases” as “Cost of raw materials and consumables” and Quickfile’s ‘Expenses’ (less salary payments) as ‘Other Charges’. Does that sound reasonable? But my confusion arises because there’s a small amount of bank interest paid which is in Quickfile as a negative “expense” rather than being part of income. Is that right? I assume that for tax purposes I should count bank interest as “other income”.

Interest received is the right section to account for bank interest earned

Hi @dlamp

The code 7900 Bank Interest Paid is for payment of interest to a bank or loan provider.

It may be worth creating a new nominal code in the Sales category for Interest Received. That will then show under the correct heading on your reports.

Hope that helps!

Oops! Many thanks for lightning quick support. Now I simply need to unlock the year end and re-tag all those transactions. Fun fun fun. Miscellaneous Income (code 4900) does say “Any Income received not entered elsewhere i.e. Bank interest or investment income” so that is what I will use.

You should be able to use the bulk recording tool rather than having to do each one individually.

Right - in recoding it doesn’t list 4900 miscellaneous income as an option. So it looks like I have to detag one-by-one - but after that it should be swift. Thanks for the tip!

Given that the interest paid by the bank is likely to be after tax, how does this get treated properly so that it doesn’t get added to your tax bill? 4900 surely doesn’t mean after tax income?

Hi @notanaccountant

With your actual tax bill, I’d recommend pointing this out to your accountant at the time of filing the relevant documents to ensure this is treated correctly. Keeping it on a separate nominal code will make it easier to find the exact amount and dates rather than looking through a list of misc. income.

Within QuickFile, the tax summary is just an estimate, so there isn’t a way to show this as part of the report.

However, it’s worth noting that since April 2016, interest has been paid gross (before tax).

Well, in this case, with interest rates as low as they are, we are talking about a very small sum of money!

Thanks Mathew,

I didn’t know about the new gross interest payments, but looking at the link you sent it explains that it is only for business accounts, yes? My concern here is about a personal account which I use for business (Sole Trade).

Anyway, now I know I need to separate it from ‘real’ income on filing.