AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
Yes, if you are UK resident: interest on a Nigerian savings, fixed deposit or domiciliary account is foreign savings income that HMRC can tax, whether or not you bring it to the UK. It goes on the SA106 foreign pages, converted to pounds at the rate when it was paid. Nigerian banks deduct 10% withholding tax, which you can usually credit against the UK tax on the same interest.
A fixed deposit in Lagos, a savings account your parents opened for you, a domiciliary account kept for school fees: if you live in the UK, the interest on each is UK-taxable income. This guide covers how much is tax-free, how to report the rest and how Nigerian tax is credited. It is information, not tax advice.
Why it counts
GOV.UK says UK residents normally pay UK tax on foreign income, including foreign interest, and that it is usually reported through Self Assessment. Before 6 April 2025, some people could avoid UK tax on foreign income they kept abroad. GOV.UK's page notes that before 6 April 2025 you may not have had to pay tax on your foreign income; that older treatment has ended. New arrivals may qualify for the four-year FIG regime instead.
How much interest is tax-free
GOV.UK sets out two allowances for savings interest:
| Your income tax band | Personal Savings Allowance |
|---|---|
| Basic rate | £1,000 a year |
| Higher rate | £500 a year |
| Additional rate | £0 |
There is also a starting rate for savings of up to £5,000 for people whose other income is under £17,570, reduced by £1 for every £1 of other income above the Personal Allowance. Foreign interest uses the same allowances as UK interest, so add your Nigerian and UK interest together.
Nigerian tax already taken
Nigerian banks now deduct 10% withholding tax on savings interest; BusinessDay reported in February 2026 that this is treated as a final tax for individual savers in Nigeria. From 1 January 2026 banks also deduct 10% on interest from foreign-currency deposits, according to BusinessDay's report of an Access Bank notice. Article 11 of the UK–Nigeria treaty caps Nigerian tax on interest paid to a UK resident at 12.5%, so a 10% deduction is within the cap.
HMRC's HS263 helpsheet says foreign tax credit relief is the lower of the foreign tax and the UK tax on the same income. If the interest falls within your allowance and no UK tax is due, there is nothing to credit the Nigerian tax against.
Worked example
Example, with an illustrative rate of ₦2,000 to £1. Bola, a higher-rate taxpayer in Bristol, earns ₦3,000,000 interest on a naira fixed deposit in 2026 to 2027. Her bank deducts ₦300,000. She has £600 of UK interest.
| Step | Amount |
|---|---|
| Nigerian interest gross | £1,500 |
| Nigerian tax deducted (10%) | £150 |
| UK interest | £600 |
| Total interest | £2,100 |
| Personal Savings Allowance (higher rate) | £500 |
| Taxable interest | £1,600 |
| UK tax at 40% | £640 |
If HMRC sets the allowance against her UK interest first, all £1,500 of Nigerian interest is taxed at 40%, which is £600 of UK tax on it. Credit is the lower of £150 and £600, so £150, and she pays £640 minus £150, which is £490. The order in which allowances are set is something to confirm with HMRC or your software; the credit cannot exceed the UK tax on the Nigerian interest.
How to report it
- Collect each interest credit and the withholding deducted, with dates.
- Convert each payment to pounds using the rate when it was paid, as HMRC's SA106 notes require; see which HMRC rate to use.
- Enter the gross interest and the Nigerian tax in the interest section of SA106.
- Tick that you are claiming foreign tax credit relief.
Interest on a dollar account follows the same steps; see dom account interest and UK tax. For the Nigerian side, our guide on withholding tax on Nigerian interest goes further.
Common mistakes
- Entering the net interest. SA106 asks for the gross amount, with the Nigerian tax shown separately.
- Using one exchange rate for the year. Interest on a fixed deposit is often credited once at maturity; convert at the rate on that date.
- Forgetting rolled-over deposits. If a fixed deposit rolls over with interest added, the interest still arose when it was credited, even though you did not withdraw it.
- Counting the naira balance as income. Only the interest is income. The capital you deposited is not taxed again.
- Ignoring small accounts. Several small accounts can together take you over your allowance.
Interest on a domiciliary account
Dollar or pound interest from a Nigerian domiciliary account is foreign interest too. Convert it to pounds at the rate when it was paid, using HMRC's rate for that currency. Since January 2026 it also suffers 10% Nigerian withholding, which you treat in the same way as the naira deduction above.
If you hold money in Nigeria only to pay family expenses, school fees or building costs, consider whether it needs to earn interest at all. A non-interest account produces no income to report, though you should still keep records of where the money came from and where it went.
Where Pryme fits
Interest on naira in Pryme Savings Boxes is naira interest like any other, so a UK resident would report it in the same way. The app shows the rate before you save, and statements show each credit for your return.
Questions people ask
Do I need to declare Nigerian interest to HMRC?
If you are UK resident, yes, it is taxable foreign income. You report it on SA106 when you file a return, using your savings allowance first.
Is Nigerian interest covered by the Personal Savings Allowance?
Yes. The allowance is £1,000 for basic-rate and £500 for higher-rate taxpayers, covering UK and foreign interest together.
Can I claim back the 10% Nigerian withholding tax?
You can usually credit it against UK tax on the same interest, up to the UK tax due on that interest. It is not refunded if no UK tax is due.
What exchange rate do I use for naira interest?
HMRC's notes say to convert at the rate when the income arose. HMRC publishes monthly and average rates.
Sources
- GOV.UK: Tax on foreign income (updated 1 Oct 2026) · accessed Oct 2026
- GOV.UK: Tax on savings interest, how much is tax-free (updated 30 Sep 2026) · accessed Oct 2026
- BusinessDay: Why was withholding tax deducted from savings interest (21 Feb 2026) · accessed Oct 2026
- BusinessDay: Banks will deduct 10% withholding tax on foreign currency interest (1 Jan 2026) · accessed Oct 2026
- HMRC HS263 Relief for foreign tax paid 2026 (updated 6 Apr 2026) · accessed Oct 2026
- HMRC SA106 Foreign notes 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.