US Treasury bill

Hi, I bought US Treasury bills issued at a discount and redeemed at their full value in less than a year. No interest is paid. For example, I bought at USD 95 and on maturity after 6 months I would get USD 100. These are issued at a discount for maturity in less than a year and pay no interest. My first inclination is that the discount must be taxed as income as if it were interest but not capital gain as I kept it until maturity. Up to today, the USD is still keeping in my oversea platform, not remitted to UK. Because they are denominated in US dollars, I need to report this in self assessment form SA106 (foreign) Page 2 as "interest on oversea saving", am I correct? the amount I need to report is in sterling so I need to convert the USD into GBP using the exchange rate on buying date and maturity date. Is my understanding correct? If not, please correct me.

Hi,

You are correct. The return is paid at maturity rather than regular interest payments. In the UK, these are known as deeply discounted securities, with the discount being the difference between the price at which they were issued and the price received at maturity. The discount is taxed as income, rather than as capital gains.

Thank you.

Hi, Thanks for your confirmation. I have one more question. Since it have not been remitted to UK. Will it be treated as an unremittable income thus I need to put a check in form SA106 box (1)?

Hi
You can only treat it as such if the country actually stops you from removing the funds.
If it is your choice not to remit it then you still need to declare it unless you are claiming the remittance basis.

If the treasury bill is traded in overseas platform, should I report this INCOME (difference between the purchasing price and the selling price / price when matured) in box 3 of SA101 (page Ai1) or Interest and other income from overseas savings in SA106 (page F2)?

Hi Kenneth123,
Deeply Discounted Securities’ (DDS) are government securities, commercial bonds and loan stock, where the amount paid on redemption is higher than the price at which they were issued.
The difference is the discount and represents the whole or part of the reward to the holder of the security for the use of the money borrowed by the security issuer.
Where certain conditions apply, the tax rules ensure that gains on such securities are taxed as income, rather than as capital gains.
SAIM3010 - Deeply discounted securities: introduction
If you invest in deeply discounted securities, put the difference between what you paid for the bond and what you redeem or sell it for in box 3 of SA101 (page Ai1). 
Thank you.