Tax payable on UK treasury stock

Victor_Potter · 18 June 2018 at 4:19PM

When my parents died in 2006 I inherited some treasury stock on which I received interest until the stock was redeemed in 2009. No tax was deducted on the interest payment and the tax rate was stated as 0%. I never thought about it and did not complete a tax return as I am a basic rate tax payer on PAYE. Should I have declared this income and paid tax on it? Also was there a CGT issue when the stock was redeemed?

londoninvestor · 18 June 2018 at 4:54PM

The income is taxable - and in those years should have been taxed at your marginal rate, as there wasn't a Personal Savings Allowance. But there is no CGT on gilts, either on redemption or on sale.

Useful article from Monevator on taxation of bonds and bond funds - it deals with gilts (of which UK Treasury Stock is one flavour) explicitly.

Wildsound · 18 June 2018 at 5:03PM

From my knowledge, you would not pay any CGT on disposing of the stock as it is exempt.

The interest you would pay income tax on. However, if you are a basic rate tax payer, you have access to the annual £1,000 savings allowance (£500 for higher rate, £0 for additional rate). If your interest from all eligible sources (e.g. cash savers, current accounts, your treasury stocks etc..) is less than this then you would not pay any tax on the interest. Prior to 2016 when the savings allowance was introduced, you would have been taxed at source at the marginal rate so you shouldn't have had to have done anything.

See government website for info (sorry can't post links yet) - just search "personal savings allowance factsheet" and "gilt edged securities exempt from capital gains tax"

Hopefully this helps

londoninvestor · 18 June 2018 at 5:27PM

Wildsound wrote: »

Prior to 2016 when the savings allowance was introduced, you would have been taxed at source at the marginal rate so you shouldn't have had to have done anything.

Not unless you specifically asked for it - by default gilt interest was paid gross, even before the PSA was introduced.

See this article from 2013 for example:

Money_Observer wrote:

Interest on gilts is normally paid gross, although holders of gilts registered with Computershare Investor Services (CIS) can apply to have it net; but the payments are liable to income tax and have to be declared on tax returns.

Tom99 · 19 June 2018 at 1:49AM

You should have paid income tax, but this is 9 years ago so I would not lose any sleep over it.

Tax payable on UK treasury stock

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