Foreign interest

Produced by a Tolley Personal Tax expert

Personal Tax

Guidance

This guidance note explains how foreign interest is taxed in the UK and how it should be reported to HMRC. It covers the treatment of bank interest, interest on loans to persons overseas, and interest on most overseas loan stock (ie interest on bonds issued by foreign governments or by companies abroad).

Some payments from offshore funds are also treated as interest and these are discussed in the Offshore funds guidance note.

For insurance products, see the Offshore bonds and other foreign policies guidance note. This note does not cover the rate of tax which is applied to the interest if it is taxable in the UK. This is covered in the Taxation of savings income guidance note.

The UK territories of the Isle of Man, Jersey and Guernsey are classed as overseas for tax purposes.

The tax status of the individual

The UK tax position of overseas interest depends on the tax status of the individual.

Generally, a taxpayer who is UK resident is taxable on their worldwide income (and gains) in the tax year in which these

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