Government Bond Interest

Hello, I had received interest from a government bond, is the interest treated as "taxed interest" when I report the self-assessment? Thanks, Karen

Hi Karen,
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).
Additional information
Thank you. 

Hello, Thanks for your reply. Currently I'm having the government bond (from non-UK government) and not yet sell it. I have interest received from the bond. Is the received interest reported as "foreign income"? Thank you.

Hi Karen,
Yes, it should be declared in a Self Assessment tax return.
Thank you. 

Does the Gilt treat as deeply discount security also? The difference upon redemption should be taxed as Gct or income tax?

Hi,

Gilt strips held by individuals and other non-corporates are treated as deeply discounted securities, and profits or losses are taken into the income regime.

Please see SAIM3130:

SAIM3130 - Deeply discounted securities: strips of government securities

Thank you.

Dear Sir, Regarding the non-UK bond investment currency exchange, should it use different exchange rate as buy and redemption? e.g. I bought the bond on year 2022 and redeemed on year 2023, my buying cost counts as the rate in year 2022 and the return counts as the rate in year 2023? Bestregards Edmund

Dera sir, Regarding the bond investment, how to claim the prepaid accrued interest and the lost when redemption? Best regards Edmund

Hi edmund,
Yes, that is correct you should use different exchange rates.
Thank you.

Dear Sir, Than you for your prompt reply. Considering the different exchange rates, if it finds lost, should it claims the lost in investment? or how to express it? pls advise, thanks! Best regards Edmund

Hi,

You can see guidance here:

HS343 Accrued Income Scheme (2024)

Thank you.

Dear Sir, Thank your for your advice. I regret that I still confuse after read the HS343. Following is the case, would you pleased to advise your comment? I bought on Dec/2022 US treasure bond Face value of USD100,000 by cost of USD98,222. and equal to GBP 86,684 (exchange rate of @1.1331 by Oct/2022 monthly average rate). It's maturity dated 15 Nov/2023 and redeemed USD100,000 and equal to GBP77,603. (exchange rate :@1.2886 by Aug/2023) I found it lost GBP9,081. May I know if it is capital loss or income loss? Which the box should I input the data? Best regards Edmund

Hi,
US government bonds, sometimes known as T-bills or treasury bills are generally taxed as income rather than capital gains. 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. 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. 
Please see guidance:
SAIM3010 - Deeply discounted securities: introduction 
Thank you.