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
Not tax-free any more. Under a tax authority notice in 2025, financial institutions must deduct 10% withholding tax from interest on short-term securities, including Treasury bills, while interest on FGN bonds stays exempt. If you are UK resident, the T-bill discount is still foreign interest to report to HMRC, and the Nigerian tax deducted can usually be credited.
For years, Nigerian Treasury bills were sold to diaspora savers with one line: the return is tax-free. That line is now out of date. Anyone buying T-bills from London, or rolling over bills bought years ago, should know what changed, what the bank or dealer now deducts, and what still has to go on a UK tax return.
What changed in 2025
Short-term government securities were previously exempt under a 2011 exemption order, as Mondaq's summary of the change notes. In 2025 the Federal Inland Revenue Service, whose work has since passed to the Nigeria Revenue Service, directed financial institutions to deduct 10% withholding tax at source on interest from short-term securities. The sources describe it in these terms:
- Covered: interest on Treasury bills, promissory notes, corporate bonds, financial papers and bills of exchange (Mondaq, KPMG).
- Who: interest "payable to any person, including non-corporate entities", so individuals are included (Templars).
- Exempt: interest on Federal Government of Nigeria bonds remains exempt (KPMG, Templars).
- Mechanics: the payer deducts on the payment date and remits by the 21st of the following month (KPMG, Mondaq).
- Credit: KPMG notes a tax credit where the deduction is not a final tax.
Two points are not settled in the sources we checked: exactly how the Nigeria Tax Act 2025, in force from January 2026, treats T-bill interest for individuals, and whether the 10% is a final tax for a non-resident individual. Ask your bank or stockbroker how they apply it to your account and request a withholding tax receipt.
How the deduction works on a discount instrument
A T-bill pays no coupon. You pay less than face value and receive face value at maturity; the difference is the interest. See how to buy Treasury bills in Nigeria for the mechanics.
Worked example (illustrative)
| Item | Example figure |
|---|---|
| Face value of a 364-day bill | ₦5,000,000 |
| Price paid (assumed) | ₦4,400,000 |
| Discount, which is the interest | ₦600,000 |
| Withholding tax at 10%, if applied to the discount | ₦60,000 |
| Net interest received | ₦540,000 |
The price is an assumption for arithmetic only; real discounts come from the auction or the dealer's quote on the day. Some dealers apply the tax at maturity, others reflect it in the price; ask yours which.
If you are UK resident: HMRC still counts it
GOV.UK says UK residents normally pay UK tax on foreign income, including foreign interest, usually reported through Self Assessment. Under the foreign pages notes (SA106), you enter the income in pounds before foreign tax, the foreign tax paid, and you may claim foreign tax credit relief, which cannot exceed the UK tax on that same income. Article 11 of the UK-Nigeria tax treaty caps Nigeria's tax on interest paid to a UK resident at 12.5%, so a 10% deduction sits inside the cap.
Continuing the example: if the ₦600,000 converts, for illustration only, to £300, you report £300 of foreign interest and £30 of Nigerian tax. If your UK rate on that income is 20%, UK tax is £60, less the £30 credit, leaving £30 to pay. The full UK reporting walk-through is in UK tax on interest from Nigerian Treasury bills, and treaty rates are set out in the UK-Nigeria treaty guide.
Rollovers, older bills and the paperwork
If you set your bank to roll bills over at each maturity, every maturity is a new interest event, and each one can carry its own deduction. Bills bought before the notice and maturing after it may also be affected, because the sources describe deduction on the payment date. That is why the dealer's answer for your own account matters more than any general rule.
The deduction is made by the payer, not by you. You do not file anything in Nigeria to have the 10% taken. What you need is evidence it was taken, because HMRC will only credit foreign tax you can show was paid. A line on a statement that reads only "WHT" with no reference is weak evidence; ask for a receipt or a schedule showing the bill, the interest and the tax.
If you are no longer UK resident
Someone who has moved back to Nigeria is outside the UK reporting duty for Nigerian interest; GOV.UK says non-residents pay UK tax only on UK income. The Nigerian deduction then simply stays as Nigeria's tax on that income, and how it fits with any Nigerian personal return depends on the rules under the new tax laws, which an adviser should confirm for you.
What to check first
- Ask your Nigerian bank or broker whether it deducts the 10% on your bills and on which amount.
- Request a withholding tax receipt or credit note for each maturity.
- Keep the purchase and maturity contract notes, with dates, for your UK return.
- If you hold FGN bonds as well, note that their interest is treated differently; see withholding tax on interest in Nigeria.
Where Pryme fits
If you fund naira investments from abroad, a Pryme account holds pounds and naira side by side, and Swap converts only when you approve, after showing the rate and fee. Statements from the account give dated records for each transfer. This is information, not tax advice.
Questions people ask
Are Treasury bills still tax-free in Nigeria?
No. Since the 2025 notice, financial institutions deduct 10% withholding tax on interest from short-term securities, including T-bills. FGN bond interest remains exempt.
Do Nigerians abroad also pay the T-bill withholding tax?
Templars describes the notice as covering interest payable to any person. Whether it is a final tax for a non-resident individual is not confirmed; ask your dealer and keep the receipt.
Do I declare Nigerian T-bill interest to HMRC?
If you are UK resident, generally yes, as foreign interest on the SA106 foreign pages, with credit for Nigerian tax deducted, up to the UK tax on that income.
Is FGN bond interest taxed?
KPMG and Templars report that interest on Federal Government bonds stays exempt from the withholding tax.
Sources
- Mondaq (Advocaat Law Practice): FIRS imposes 10% withholding tax on interest on short-term securities (14 Nov 2025) · accessed Oct 2026
- KPMG TaxNewsFlash: Nigeria guidance on withholding tax on interest from short-term securities (Dec 2025) · accessed Oct 2026
- Templars: Transcripts, Tax (8 Oct 2025) · accessed Oct 2026
- GOV.UK: Tax on foreign income (updated 1 Oct 2026) · accessed Oct 2026
- HMRC: SA106 Foreign notes 2026 · accessed Oct 2026
- GOV.UK: UK-Nigeria Double Taxation Convention (1987, in force) · 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.