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
  • mike
    Re: What is My Tax Code?
    I currently earn £27160 yearly and just got a second job for an agency earning around 140 a week what will my tax code change to.
    15 September 2020
  • Robbie
    Re: Should I be Paid Mileage Allowance?
    I worked for a company they agreed to pay me 20p per mile and I’ve submitted all the expense forms but they haven’t paid…
    10 September 2020
  • tiff
    Re: How Will My Second Job Be Taxed?
    i currently work 40 hours a week on £20,000 a year, but have taken on part time employment which is 15 hours a week on…
    8 September 2020
  • ade
    Re: How Will My Second Job Be Taxed?
    I have got a full time job , I earning 33000 a year and I started a part time self employed job last month hoping to earn…
    25 August 2020
  • pseagraves
    Re: Should I be Paid Mileage Allowance?
    I am receiving a small car allowance however my employer is only reimbursing 9p a mile based on an APR rate. Am I right…
    10 August 2020
  • Jas
    Re: How Will My Second Job Be Taxed?
    Hi I have 2 jobs my first job I get paid 1150 second job paid 362 after tax it is BR tax but I'm sure on both my jobs I am…
    2 July 2020
  • Stig
    Re: What is My Tax Code?
    I recently got moved on to a k2600 tax code. My earnings have increased and I now get a fully fuelled car. My earnings prior to this were…
    19 June 2020
  • Legend
    Re: Should I be Paid Mileage Allowance?
    Hi my company are not paying me mileage I'm doing 84 miles a day.They provide me with a works van but can I still claim…
    3 June 2020
  • Caramel
    Re: How Will My Second Job Be Taxed?
    I currently have a full time job and wonder if I get a second job, is it worth it? If earning under 40k (doing both jobs and…
    30 May 2020
  • Dee
    Re: How Will My Second Job Be Taxed?
    I'm currently working full-time, as from next week I will be going part-time, and at the same time starting a new part-time…
    6 May 2020