US T-Bills gain

May I ask if I sell my US T-Bills before the maturity date and gain a profit (not interest), I should report it as capital gain or income in my coming self-assessment? Thanks!

Hi,

US government bonds, sometimes known as T-bills or treasury bills are generally taxed as income rather than capital gains. Where they are disposed of before maturity, any difference between the price at which they were issued at and the price received on their disposal, will generate a gain or a loss.

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 deeply discounted securities are entered at SA101 box 3 and foreign gains from deeply discounted securities at box 41 of SA106 and then claim Foreign Tax Credit Relief at box 2.

You can see guidance here:

SAIM3010 - Deeply discounted securities

Thank you.

Thanks a lot for your reply! This is what I am confused. As you mentioned "Where they are disposed of before maturity, any difference between the price at which they were issued at and the price received on their disposal, will generate a gain or a loss.". I can understand if I receive any interest or coupon from those bonds/ T-Bills...etc., should be taxed as income, however, if the T-bills sell before the maturity date, since this is an investment, the profit/loss will be taxed as Capital Gain/Loss, right? Thanks!

Besides that, I saw that there was a reply by HMRC and said: " As a Deeply Discounted Security (DDS), normally a US Treasury bond would be subject to Income Tax on maturity for UK taxation purposes. However, if redeemed or sold before maturity would be subject to CGT, therefore, CG liability or loss may arise. Pleease see CG54602 - Deep discount securities: CGT adjustment - HMRC internal manual - GOV.UK CG54602 - Deep discount securities: CGT adjustment. Therefore, any gain would be entered onto shares and securities area of CG schedule. If double taxation applies any relief would be claimed on the Foreign schedule, CG area." I was a bit confused how to tax the profit/ loss from US bonds if sell before the maturity date. Thanks!

Hi,

Yes, that is correct.

Thank you.