Constantin

Dear HMRC Admin, I think this is a very important question that should be addressed. So I was wondering about the same issue. Consider the following example, which should be straightforward to explain the tax involved. Suppose I had bought a corporate bond from a European company that was initially issued at €100 per bond in 2020 and will be redeemed at maturity in 2030 at €100 per bond. Due to rising interest rates, the price of the bond fell and in 2023 it was trading at 90 euros per bond, which is the price at which I would have bought the bond. I receive 3% interest each year. As I understand it, the taxes would be as follows - Income tax on the 3% annual interest. - Capital gains on the €10 difference between the price at maturity (€100) and the price at which I bought the bond (€90). Could you confirm my understanding? Or what taxes would be incurred in the above example? I believe this example would be helpful to understand bond taxation in general and help the community. Thanks in advance!