A plain-English summary of how interest paid on CM Beyer loan notes is treated for UK tax purposes. This article is for general guidance only and is not personal tax advice — see the note at the end.
Interest is taxable income
Interest paid to UK-resident individuals on CM Beyer loan notes is treated as savings income for income tax purposes. It is taxable in the tax year in which it is received.
How we pay interest
CM Beyer pays loan note interest gross — that is, without deducting income tax at source. This is the standard treatment for interest paid by a UK company on private loan notes to individual investors. You are responsible for declaring and paying any tax due on the interest you receive.
Personal Savings Allowance
UK-resident individuals are entitled to a Personal Savings Allowance (PSA) which covers a portion of savings income at a zero rate. The current PSA amounts depend on your tax band. For up-to-date figures, see gov.uk: tax on savings interest.
Declaring interest on your tax return
If you complete a Self Assessment tax return, declare loan note interest in the savings income section. If you do not normally complete a tax return, you may need to register if your savings income exceeds the relevant threshold. CM Beyer will provide an annual interest statement for each tax year on request.
ISA eligibility
CM Beyer loan notes are not currently held within an Innovative Finance ISA (IFISA) wrapper. Interest is therefore not tax-free, although the Personal Savings Allowance may reduce or eliminate the tax due for some investors.
Non-UK investors
Investors resident outside the UK should seek local tax advice. The UK has double-taxation treaties with many jurisdictions which may affect how interest is taxed in your country of residence.
Corporate investors
Where loan notes are held by a company rather than an individual, interest is treated as a non-trading loan relationship credit and is taxable as part of the company’s profits.
This is not tax advice
Tax rules change and individual circumstances vary. This article describes our general understanding of the position as at the date of publication. For advice on your specific tax position, please consult a qualified tax adviser. Other useful resources: What are loan notes?, How dividends work, and our investor page.
