Tax on savings and investments Taxable savings and investments

Some savings and investments have the income paid without tax deducted. However, this doesn’t mean they are tax-free. 

Unless you are a non-taxpayer, you have to declare the income and pay the tax. We call these taxable investments.

Quick summary of taxable savings and investments

The table below clarifies the savings or investment income you must declare.

With some savings and investments, income is paid without tax deducted (known as paid gross) but this doesn't mean tax isn't due. Unless you are a non-taxpayer, you have to declare it and pay the tax.

Taxable
Type of income Notes
Accounts at an offshore (eg Jersey, Isle of Man) branch of a UK or foreign bank or building society n/a
British government stocks (gilts) acquired since 6 April 1998 No capital gains tax to pay: taxpayers can apply for net payment
Co-operative Society deposits n/a
Corporate bonds, debentures, loan stock and other fixed-income investments No capital gains tax if they count as qualifying corporate bonds
Credit union deposits n/a
Interest from private individuals n/a
NS&I: Easy Access Savings Account (EASA) n/a
NS&I: some other accounts and bonds (but not premium bonds or Isas) or guaranteed income growth bonds n/a
Offshore managed funds n/a
Permanent interest-bearing shares (PIBS) No capital gains tax if count as qualifying corporate bonds
Proceeds from offshore non-qualifying UK life insurance policies Only if you pay higher-rate tax. If not, gains treated as tax-free
Proceeds from non-UK life insurance policies n/a
Real estate investment trusts n/a
War loans No capital gains tax to pay

National Savings & Investments

pile of £20 notes with some flicked up

You will have to declare your income on NS&I products

Interest you accrue on the following NS&I products is paid gross, so you will have to declare it for tax purposes.

  • Guaranteed Growth Bonds
  • Income Bonds
  • Guaranteed Equity Bonds
  • Investment Accounts
  • Easy Access Savings Accounts

British government stocks (gilts)

The interest on gilts (short for gilt-edged securities) bought since 6 April 1998 is usually paid gross, but you can ask to have it paid with tax already deducted.

Conversely, interest on gilts bought before 6 April 1998 is usually paid with tax deducted, but you can choose to be paid gross.

Gilts are also free of capital gains tax.

Corporate bonds and permanent interest-bearing shares (Pibs)

If you invest direct into corporate bonds and Pibs, most will pay the interest gross so you will have to declare any tax due on your tax return or to your tax office.

If you have a unit trust or Oeic that invests in Pibs or corporate bonds, distributions are paid with 20% tax already deducted.

Offshore accounts

Interest on offshore accounts and investment funds, such as those based in the Channel Islands, is paid gross. 

UK residents are normally charged tax on the full amount of foreign income, whether it is brought into the UK or not. 

You need to declare this type of income on your tax return using special supplementary pages for foreign income. If you don’t normally complete a tax return, contact your tax office.

 

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