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Say if I buy a 3.75% gilt for £103, with a redemption date 1 year from now, then at the the end of the year I should receive £3.75 interest from coupons, but I lose £3 of capital. The total gain is £0.75.

Do I need to pay tax on £3.75 (which is the interest I received) or £0.75 which is the money I actually made ?

I am an overseas investor and the gilt is not taxed in the UK if that makes any difference.

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    Which country's tax code are you asking about? Tax questions need a country tag. – Chris W. Rea Sep 13 at 19:01

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