Income from corporate bonds - tax return

mroller

All,

I was thinking of buying the new LLoyds retail bond paying 5.5% annually.

I understand tax is not deducted at source on the income so I presume I have to fill in a tax return.

Currently I dont have to fill tax returns. if I buy this bond, will I have to just complete a reduced tax return with the income from this bond only or will I have to fill a complete tax return? (in which case I will have to add up all interest from my saving accounts, salary, dividends...)

Sorry for the basic question, I have never filled a tax return!

taxing

mroller wrote: »

All,

I was thinking of buying the new LLoyds retail bond paying 5.5% annually.

I understand tax is not deducted at source on the income so I presume I have to fill in a tax return.

Currently I dont have to fill tax returns. if I buy this bond, will I have to just complete a reduced tax return with the income from this bond only or will I have to fill a complete tax return? (in which case I will have to add up all interest from my saving accounts, salary, dividends...)

Sorry for the basic question, I have never filled a tax return!

Need more info to know if you fall in to the category for completing Tax Returns. Look at HMRC web page (is user friendly) at this
link:

http://www.hmrc.gov.uk/sa/need-tax-return.htm


Here is an extract from that which tells you what circumstances cause you to have to fill in a Tax Return - and once you are 'in the club' then YES, it is a return of your worldwide income for the tax year from all sources even if tax was stopped by the payer (on bank interest etc).

Income above a certain level from savings, investment or property

If you don't already complete a tax return, you'll need to do so if you receive any of the following:

• income from savings and investments of £10,000 or more
• income from untaxed savings and investments of £2,500 or more
• income from property (before deducting allowable expenses) of £10,000 or more
• income from property (after deducting allowable expenses) of £2,500 or more
• annual trust or settlement income on which tax is still due (even if you’re only treated as receiving this income)
• income from the estate of a deceased person on which tax is still due

Hope this helps.

mroller

Thanks, that does help indeed.

So if my income from the bond is less than 2.5K a year then I can keep it tax free?

dzug1

mroller wrote: »

Thanks, that does help indeed.

So if my income from the bond is less than 2.5K a year then I can keep it tax free?

No - you still have to pay the tax. But you don't need to fill in a tax return but can deal with the matter by letter.

mroller

Thanks guys, now I know everything i wanted to know.
I will just buy some for my Isa as otherwise it is just too much hassle.