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Posted Wed, 03 Apr 2024 13:02:00 GMT by Alex
I invested in US Treasury Bonds through a UK securities brokerage firm. Is it classified as UK income / capital gain or foreign income / capital gain when the coupon and principal were received? Thanks.
Posted Fri, 12 Apr 2024 13:25:47 GMT by HMRC Admin 32 Response
Hi,

US government bonds, sometimes known as T-bills or treasury bills are generally taxed as income rather than capital gains.  
In the UK, these are known as deeply discounted securities (DDS), with the discount being the difference between the price at which they were issued and the price received at maturity.  
On a foreign investment the income is the difference between the purchase and redemption price after each has been converted to sterling on the day the transactions took place, so includes any foreign exchange gains. Losses cannot be deducted.  
UK gains from DDS SA101 go in box 3 and foreign gains from in box 41 of SA106 and claim FTCR box 2.  
Purchasing US treasury bonds vis a UK broker is still treated as foreign income and is declared in SA106.

Thank you.

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