Home > Ask Our Experts > Do You have to Declare Investment on Premium Bonds?

Do You have to Declare Investment on Premium Bonds?

By: J.A.J Aaronson - Updated: 18 Nov 2014 | comments*Discuss
 
Investment Bonds Premium Bonds Winnings

Q.

I want to know if i was to invest in premium bonds would I have to declare my investment on my self-assessment form?

I know you don't have to declare any winnings but what about the money you have invested?

(Mr R. K., 24 October 2008)

A.

Premium Bonds are becoming an increasingly popular investment. In these times of financial uncertainty, many people are rushing to move their money to places in which they are confident it will be safe. National Savings and Investments (NS&I), the organisation that administers Premium Bonds and a selection of other investment vehicles, is amongst the safest institutions in the UK, as your money is 100% guaranteed by the Treasury. Indeed, the attractive nature of these products can be illustrated by the fact that NS&I have been forced to restrict access as a result of an overwhelming amount of new custom.

Premium Bond Advantages

Aside from the security, one of the great advantages of Premium Bonds is their favourable tax status. Premium Bonds are not a particularly attractive investment from an income point of view, as their interest rates are very low. However, they operate on a lottery basis, and there is always the chance that you could make a large winning and therefore increase the effective interest rate by a significant amount. As you state, all Premium Bond winnings are free from Income Tax, meaning that you keep 100% of the amount that you win. However, there seems to be some confusion regarding their status as an investment for other purposes.

Capital Gains Tax

As a self-assessment tax payer you are obliged to give details of your investments. This is for savings tax and Capital Gains Tax purposes. The treatment of your Premium Bonds will depend on whether you are a basic or a higher rate tax payer. If you are a higher rate tax payer and you receive net interest (that is, tax is deducted before you receive your interest), then you do indeed have a responsibility to declare your investment on your self assessment. If you are a basic rate tax payer, no tax liability will arise and it will therefore have no effect on your self assessment; as has been mentioned, Premium Bonds are not chargeable to Capital Gains Tax.

National Savings and Investments give some basic guidance regarding the tax treatment of each of their products on their website. You may wish to give them a call to discuss your individual situation and put your mind at ease.

You might also like...
Share Your Story, Join the Discussion or Seek Advice..
@Nobby - For benefits such as Housing Benefit, Council Tax Benefit premium bonds can betreated as 'capital'.
John - 18-Nov-14 @ 11:06 AM
Does my mothers premium bonds impact on her benefits
Nobby - 16-Nov-14 @ 2:53 PM
Share Your Story, Join the Discussion or Seek Advice...
Title:
(never shown)
Firstname:
(never shown)
Surname:
(never shown)
Email:
(never shown)
Nickname:
(shown)
Comment:
Validate:
Enter word:
Latest Comments
  • Sbuj
    Re: How Will My Second Job Be Taxed?
    Hi I have full time job plus extra part time if I will start working for agency tax for one of my extra jobs will b change…
    16 October 2018
  • Lizzie
    Re: Children's Bonus Bond
    I was bought a £25 Children's Bonus Bond as a christening present in 2001 and was wondering how much it is worth now and when it matures.
    8 October 2018
  • Storm
    Re: What Does Road Tax Pay For?
    I see a fair bit of pothole repairs, the biggest problem I see is the work carried out is very poor indeed more often than not as…
    26 September 2018
  • PETA
    Re: Payment of Pensions
    Can I change my pension to weekly how does this work
    20 September 2018
  • Kaz
    Re: How Will My Second Job Be Taxed?
    Up until june this year i only had 1 job of 14 hrs a wk at minimum.wage, i now have 3 jobs, the 2nd one being 6.7 hrs a wk @…
    19 September 2018
  • Dom
    Re: Claiming Tax Relief on Mileage
    I am paid a £250 per month travel allowance with my salary, and claim monthly travel expenses each month from the company for…
    13 September 2018
  • Fifi
    Re: How Will My Second Job Be Taxed?
    Hi I’m working 22hrs a week at 7.85ph but also signed up to an agency to work as and when, how much tax would I pay
    11 September 2018
  • Littledigidi
    Re: Claiming Tax Relief on Mileage
    Hi - I have a fuel card, the majority of my mileage is work related. can i claim any tax back on this. My company pay for all my…
    10 September 2018
  • TheTaxGuide
    Re: How Will My Second Job Be Taxed?
    B - Your Question:I have two jobs the first is as and when and the second is 12 hrs a week, combined I am nowhere near the…
    4 September 2018
  • Loui
    Re: How Will My Second Job Be Taxed?
    I am employed working 15hrs at £8.20 but get paid monthly and I'm self employed for 2 hrs a week at £8.00 a week. Would I get…
    3 September 2018