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The short answer
For a UK resident, coupons on Nigerian Eurobonds are overseas savings income, reported on the SA106 foreign pages and converted from dollars to pounds at the rate when each coupon was paid. Your personal savings allowance can cover part of it. Buying or selling between coupon dates brings in HMRC's accrued income scheme if your bond holdings exceed £5,000 nominal, and any Nigerian tax deducted can be credited, limited by the treaty and the UK tax due.
Coupons are foreign savings income
GOV.UK says UK residents normally pay UK tax on foreign income, including foreign interest, usually through Self Assessment. A Eurobond coupon is interest on a foreign government security, so it belongs in the interest boxes on the SA106 foreign pages, with NGA as the country code. HMRC's SA106 notes say to convert foreign amounts at the exchange rate at the time the income arose.
Your personal savings allowance applies to the total of your UK and foreign interest. GOV.UK gives it as £1,000 for basic-rate, £500 for higher-rate and nil for additional-rate taxpayers, with a starting rate for savings of up to £5,000 where other income is under £17,570.
Is there Nigerian tax to credit?
Check your broker or custodian statement for each coupon. If tax was deducted, the UK–Nigeria treaty caps Nigerian tax on interest paid to a UK resident at 12.5% (Article 11), and HMRC's HS263 allows credit at the lower of the foreign tax (or the treaty-limited amount) and the UK tax on the same income. If nothing was deducted, enter nil foreign tax and do not claim relief. Do not assume a deduction; enter what the statement shows.
Worked example: coupons
Example only. You hold US$200,000 nominal of a 7.875% bond. Each half-yearly coupon is $7,875. If one is paid when the example rate is $1.30 to £1 you enter £6,057.69; if the next arrives at $1.35, £5,833.33. Total column B for the year: £11,891.02. A higher-rate taxpayer with no other savings income has £500 covered by the allowance; the rest is taxed at their savings rate.
Buying or selling between coupon dates
Eurobond prices are quoted clean, with accrued interest added on top. HMRC's HS343 helpsheet says the accrued income scheme covers securities issued by overseas governments, and applies when the total nominal value of your securities exceeds £5,000 at any time in the tax year or the previous one. A single Eurobond lot will exceed that.
- If you sell
- The accrued interest you are paid is an accrued income profit, taxed as income.
- If you buy
- The accrued interest you paid is an accrued income loss, which reduces the next coupon's taxable amount.
- Exchange rate
- Foreign-currency amounts are converted at the spot rate on the settlement day.
- Timing
- The profit or loss belongs to the tax year in which the next coupon date falls.
- On the return
- Totals for foreign securities are added to or subtracted from column B of the overseas savings income box on the SA106.
Worked example: accrued interest on purchase
Example only. You buy 90 days into a 182-day coupon period and pay accrued interest of about $3,894 (from the contract note). At the next coupon you receive $7,875. Under the scheme, the $3,894 is an accrued income loss: converted at the settlement-day rate, it reduces the taxable coupon. Use the contract note figure rather than calculating it yourself where you have one.
Gains when you sell
Selling a bond for more or less than you paid is a capital question, separate from the coupon. HS343 does not cover capital gains, so check HMRC's capital gains guidance or an adviser on whether a gain is chargeable and how currency movement is measured. Keep the purchase and sale contract notes and the exchange rates on each settlement date. See currency gains and UK capital gains tax for the currency side.
Holding through a fund instead
If you hold Eurobonds through a Nigerian dollar fund rather than directly, the rules change: distributions are fund income, and a gain on sale may be an offshore income gain under HMRC's offshore fund rules. See Nigerian funds and UK offshore fund rules.
Bonds in an ISA or pension
HS343 says interest that is exempt from tax, such as within an ISA, is outside the accrued income scheme. If your provider allows a Nigerian Eurobond inside a stocks and shares ISA or a SIPP, coupons there are not reported on the SA106. Whether a specific bond is eligible, and whether your provider will hold it, is for the provider to confirm.
Checklist for your return
- List each coupon with its date, dollar amount and any tax deducted.
- Convert each at the rate on its payment date and record the source.
- Add accrued income profits or subtract losses from any purchases or sales in the year.
- Enter the total in the SA106 interest boxes with NGA as the country code.
- Claim foreign tax credit relief only if tax was actually deducted.
Where Pryme fits
Dollar coupons can sit in the dollar side of a Pryme multicurrency account, so the amount and date of each credit are on your statement. Swap converts to pounds when you choose, with the rate and fee shown before you approve. To buy the bonds in the first place, see Nigerian Eurobonds through a UK broker.
Questions people ask
Do I pay UK tax on Nigerian Eurobond coupons?
If you are UK resident, generally yes: they are foreign savings income, taxed above your personal savings allowance.
Which exchange rate do I use for Eurobond coupons?
The rate when each coupon was paid, as HMRC's SA106 notes say. For accrued interest under HS343, the spot rate on the settlement day.
Does the accrued income scheme apply to Eurobonds?
Yes, HS343 covers securities issued by overseas governments, where your total nominal holdings exceed £5,000.
Is Nigerian tax deducted from Eurobond interest?
Check your broker statement. If tax was deducted, you can usually claim credit; if not, there is nothing to claim.
Sources
- GOV.UK: Tax on foreign income (updated 1 Oct 2026) · accessed Oct 2026
- HMRC: SA106 Foreign notes 2026 · accessed Oct 2026
- GOV.UK: Tax on savings interest, how much is tax free (updated 30 Sep 2026) · accessed Oct 2026
- HMRC: Accrued Income Scheme 2026 (HS343, updated 6 Apr 2026) · accessed Oct 2026
- HMRC: Relief for foreign tax paid 2026 (HS263, updated 6 Apr 2026) · accessed Oct 2026
- UK–Nigeria Double Taxation Convention 1987 (GOV.UK PDF) · 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.