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The short answer
If you are UK tax resident, interest from a Nigerian government diaspora bond is foreign savings income, and GOV.UK says UK residents normally pay UK tax on foreign interest, usually reported through Self Assessment on the SA106 foreign pages. You report the coupon in pounds, before any foreign tax, and can claim credit only for Nigerian tax actually withheld. New arrivals in their first four years may be able to claim the foreign income and gains (FIG) regime instead.
Nigeria's first diaspora bond was sold in June 2017 and was aimed at Nigerians abroad, including many in Britain. If you bought it, or you hold a later Nigerian dollar bond through a UK bank or wealth manager, the coupon is the part that HMRC cares about each year. This guide sets out what is known about the bond itself, how the UK treats the interest, and the records that make the return easy to defend.
What the 2017 diaspora bond was
ThisDay reported on 20 June 2017 that the Federal Government raised $300 million through the diaspora bond at a coupon of 5.625% a year with a five-year tenor. The bond was registered with the US Securities and Exchange Commission and the UK Listing Authority, was structured for retail buyers and was sold through private banks and wealth managers. A five-year bond issued in mid-2017 was due to be repaid in 2022, so for most holders the live tax questions are about the coupons received up to then, or about a different Nigerian dollar bond held today.
When we checked in October 2026 we found no announcement of a new diaspora bond. If you see one advertised, check the Debt Management Office's own site before paying anyone, and read where a new diaspora bond issue stands. For background on Nigeria's dollar instruments, see diaspora investment options: Nigeria's dollar bond and Eurobonds.
How the UK taxes the coupon
GOV.UK's page on tax on foreign income (updated 1 October 2026) says UK residents normally pay UK tax on foreign income, and lists foreign interest among the types covered. It adds that before 6 April 2025 domicile could change the answer; from that date the old remittance basis has gone, and the test is residence plus, for newcomers, the FIG regime.
If you arrived in the UK recently
LITRG explains that the FIG regime is open to someone who is UK resident and was not UK resident in any of the previous ten consecutive tax years. It lasts for a maximum of four consecutive years from the first year of residence. You claim it on your return by identifying the amounts, and the claim has costs: LITRG notes you lose the personal allowance and the capital gains annual exempt amount for that year. For a modest coupon, claiming can leave you worse off, so do the sum both ways.
Allowances that may cover the interest
GOV.UK sets the Personal Savings Allowance at £1,000 for basic-rate taxpayers, £500 for higher-rate and nothing for additional-rate taxpayers, with a starting rate for savings of up to £5,000 if your other income is under £17,570 (figures as at October 2026). These apply to savings interest generally. Whether your coupon is fully covered depends on your other interest that year, so add up UK bank interest and the bond coupon together.
Where it goes on the return
HMRC's SA106 notes for 2026 ask for each foreign income item by country. For interest you give the country code (Nigeria is NGA), the amount in pounds before any foreign tax, the foreign tax paid, and whether you are claiming foreign tax credit relief. The coupon is paid in dollars, so you convert each payment to pounds and keep a note of the rate you used and where it came from.
| SA106 item | What you enter for a bond coupon |
|---|---|
| Country code | NGA |
| Amount before foreign tax | Coupon in pounds, converted at a rate you record |
| Foreign tax taken off | Only tax actually withheld, shown on the payment advice |
| Foreign tax credit relief | Tick only if Nigerian tax was withheld and you claim credit |
| FIG claim | Only if you qualify and choose to claim |
HMRC's helpsheet HS263 explains how credit for foreign tax is worked out. The credit cannot exceed the UK tax on the same income. Check the payment advice or the bond's offering document to see whether any Nigerian tax was in fact withheld; do not assume a rate.
A worked example
Example only. Ada, a basic-rate taxpayer in Leeds, holds $10,000 nominal of a dollar bond paying 5.625% a year. The annual coupon is $10,000 x 5.625% = $562.50. If it arrives in two equal payments of $281.25 and she converts each at an example rate of £0.75 per dollar, she records £210.94 twice, a total of £421.88. Her UK bank interest that year is £300, so her savings income is £721.88, inside her £1,000 allowance. She still lists the coupon on the SA106 because she files a return for her rental income anyway.
What to check first
- Confirm which bond you hold: the 2017 diaspora bond, a Eurobond or something else. The tax treatment of the coupon is similar, but sale and redemption questions differ.
- Collect every coupon advice from your bank or custodian, with dates and amounts.
- Check whether any Nigerian tax was deducted. If none, there is no foreign tax credit to claim.
- Decide whether the FIG regime is worth claiming if you are in your first four UK years.
- If you sold before maturity, ask an adviser about capital gains and accrued interest; this article covers the coupon only.
Where Pryme fits
A Pryme account holds dollars and pounds side by side, so a coupon can stay in dollars until you choose to convert with Swap; the app shows the rate and the fee before you approve. Statements from verifiable receipts and statements, in partnership with VerifyDoc.ai, give you a clean record of each payment for your return. See multicurrency accounts.
Questions people ask
Do I pay UK tax on Nigerian diaspora bond interest?
If you are UK resident, normally yes. GOV.UK treats foreign interest as foreign income that UK residents pay tax on, usually reported via Self Assessment, unless you qualify for and claim the FIG regime.
Does the Personal Savings Allowance cover bond coupons?
The allowance (£1,000 basic rate, £500 higher rate as at October 2026) applies to savings interest. Add the coupon to your other interest for the year to see whether you are inside it.
What country code do I use for Nigeria on SA106?
HMRC's SA106 notes use NGA for Nigeria.
Is there a new Nigeria diaspora bond in 2026?
We found no announcement of a new issue in October 2026. Check the Debt Management Office before acting on any offer.
Sources
- ThisDay: In a first, diaspora bond, FG successfully raises $300m (20 Jun 2017) · accessed Oct 2026
- GOV.UK: Tax on foreign income (updated 1 Oct 2026) · accessed Oct 2026
- LITRG: Foreign income and gains regime, tax years 2025/26 onwards (updated 6 Apr 2026) · accessed Oct 2026
- GOV.UK: Tax on savings interest, how much is tax free (updated 30 Sep 2026) · accessed Oct 2026
- HMRC: SA106 Foreign notes 2026 · accessed Oct 2026
- HMRC: Relief for foreign tax paid 2026, HS263 (updated 6 Apr 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.