Part of the income you receive is tax-free. Your gross income payments are made up of two parts, a 'capital' part and an 'interest' part. The capital part is treated as a return of your capital and so is not taxed. We normally pay the interest part after deducting tax at the savings rate. You may need to pay more or less than this, depending on your tax rate.
Any reference to legislation and taxation is based on our understanding of law and HM Revenue & Customs practice at date of publication. Legislation and taxation are liable to change in the future.
