The interest you receive on your corporate bond – technically known as the ‘coupon’ – is liable to income tax at your marginal rate. basic rate tax is deducted at source, so basic rate taxpayers need do nothing more. Higher and highest rate taxpayers must declare this income as part of their annual self assessment tax return. Non taxpayers, on the other hand, can claim that tax paid back.

High yield, or non-investment grade corporate bonds carry a higher risk and their suitability as an investment are subject to your own circumstances and attitude to risk.