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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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Have invested £50k in USA housing bond getting 12% per year

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Have invested £50k in USA housing bond getting 12% per year for 3 years. Mandatory 20% tax deducted....can I get tax rebate as I'm retired on company pension of £20k

The income from bonds such as the one you have invested in is taxable in the UK and I'm assuming you invested through a UK base funds, hence the 20% tax deduction from the interest.

The personal allowance for an individual born after 5 April 1948 is £10,000, for those born between 6 April 1938 and 5 April 1948 it is £10,500 and for those born before 6 April 1938 it is £10,660. That is the amount of tax fee income you can have. The next £31,865 is taxed at 20% so I'm afraid that you won't qualify for repayment of any of the tax deducted from your bond interest.

I hope this clarifies your situation but let know if you have nay further questions.
Customer: replied 3 years ago.

Does the UK have any tax treaty with the USA that may get some of the monies back ??

There is a treaty between the UK and the USA which you can find here and interest is covered by Article 11. Interest will normally only be taxable in the country of residence of the depositor but that doesn't necessarily stop withholding tax being deducted in the country of payment, mainly due to the depositor not completing tax exemption forms for the US tax authorities.

I suspect that the tax deduction you have suffered is UK tax as the rate of 20% is what is normally deducted by UK based deposit takers. Either way, the interest is taxable in the UK, in your case at 20%. I would have expected you to have been aked to complete US tax exemption forms initially if the investment was made directly with a US based fund. That would not be the case with a UK based fund as the tax deduction would be UK tax.
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