Tax treatment of non-UK interest routed through a UK entity

aroominyork

Can anyone tell me whether interest from Israel Bonds (loans to the Israel govt) count as UK or foreign interest? The investment is routed through an FCA-registered UK entity, but the income is from the State of Israel. I asked the UK entity and they (unhelpfully) said to check with a tax advisor… I don’t have one of them! Also, if it counts as overseas income is it taxed at my usual marginal tax rate? Thanks.

wmb194

aroominyork said:

Can anyone tell me whether interest from Israel Bonds (loans to the Israel govt) count as UK or foreign interest? The investment is routed through an FCA-registered UK entity, but the income is from the State of Israel. I asked the UK entity and they (unhelpfully) said to check with a tax advisor… I don’t have one of them! Also, if it counts as overseas income is it taxed at my usual marginal tax rate? Thanks.

Foreign. For instance you could own UST's via a UK stockbroker but interest paid would count as foreign. Unless there's withholding tax you could claim some relief against it doesn't make any difference to the taxation.

aroominyork

Thanks wmb194. Self-assessment has a box for "Untaxed foreign interest (up to £2,000)" in the section "UK interest and dividends". Is that to keep the form simple for small amounts, and if it is over £2000 you need to complete the separate Foreign page?

wmb194

aroominyork said:

Thanks wmb194. Self-assessment has a box for "Untaxed foreign interest (up to £2,000)" in the section "UK interest and dividends". Is that to keep the form simple for small amounts, and if it is over £2000 you need to complete the separate Foreign page?

Yes. I always fill in the foreign pages but I'd imagine that even if the amounts are less than £2,000 you can still complete them as I think you need to anyway if you want to claim relief on foreign withholding tax.