Income tax on UK government gilt

chinadolltj

Hi all, 

Could I please ask if my understanding is correct that if I purchase UK government gilt outside of any tax shelter, as long as the interest generated from my overall saving/investment is less than £10,000, I don't have to do the self assessment tax return? The HMRC will auto deduct the tax from my next year's tax code?

I know it is the case for bank savings but not sure about the gilt purchase.

Many thanks for your answer in advance.

Doctor_Who

chinadolltj said:

Hi all, 

Could I please ask if my understanding is correct that if I purchase UK government gilt outside of any tax shelter, as long as the interest generated from my overall saving/investment is less than £10,000, I don't have to do the self assessment tax return? The HMRC will auto deduct the tax from my next year's tax code?

I know it is the case for bank savings but not sure about the gilt purchase.

Many thanks for your answer in advance.

Yes, you don't need to register for SA unless your income from savings and investments is more than £10K. Your question about whether interest payments from gilts outside a tax wrapper are reported to HMRC is one I don't have an answer for. I suppose it would depend on how you are holding the gilts, if it's through an investment platform (like HL) then maybe they report the interest to HMRC. Either way, you should keep your own records.

https://www.litrg.org.uk/tax-guides/tax-basics/do-i-need-complete-tax-return

xylophone

https://www.gov.uk/apply-tax-free-interest-on-savings

https://www.litrg.org.uk/tax-guides/savers-property-owners-and-other-tax-issues/savings-and-tax

The PSA does apply to interest from gilts but there is nothing in the above to suggest that information on  interest on gilts is automatically reported to HMRC - if you hold gilts outside an ISA it may be that you need to report  the interest earned if it, together with other interest takes you above your PSA. 

https://taxaid.org.uk/guides/information/an-introduction-to-income-tax-national-insurance-and-tax-credits/income-tax/it-is-your-responsibility-to-tell-hmrc-if-you-owe-income-tax

masonic

As stated above, it is unlikely your investment provider will report the interest, so you would need to inform HMRC of anything that would be taxable. It should be possible to collect via an adjustment to your tax code. You can inform HMRC of other income through your personal tax account.