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.

Dear sir, I understood it is DDS and tax as income. The questions I still need to clear before return assessment as follwoing 1) regarding the previous sample, Is calculation corrected? (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. ) 2) losses cannot be deducted Count as each deal? (counts the gained deals only and dismiss the loss deal.) or count as whole tax year? (count Gains and losses annually) e.g. I invested 2 deals, one gains GBP1000, the other loss GBP400, should I just report the gained one (GBP1,000) or report 2 deals annually, totally gains GBP600 (1000-400) Best regards edmund

Hi edmund,
This forum is for general queries only and is intended to help you self-serve.
We are unable to provide specific advice tailored to individual circumstances. 
You may wish to contact our Self Assesment helpline contact our webchat facility here:
Self Assessment: general enquiries
Or seek professional advice.
Thank you. 

Dear Sir, Thank you for your reply and understood you can't advise the specific question. So, I break it to simple questions. 1) Lost in DDS investment, should it report in self assessment? 2) gain or lost, it counts for whole tax year or each deal? best regards 

Name removed admin .

Hi,
You add up all your gains in the year and deduct the losses. If a gain still arises, this is declared.  
There is no requirement to report losses to HMRC, unless you want to apply those losses in some way. If you complete a tax return, you would claim the losses in the capital gains section, along with the action to be taken.  
If you do not need to complete a tax return, then you declare the same, but in a letter, declaring the action to be taken. In both cases, you will need to provide supporting evdience of the losses.
You should note that loss relief on deeply discounted securities was largely abolished on 27 March 2023, as explained in the guidance below. There is an exception to this rule for government securities and there is also a special rule that relates to securities held before the above date. 
SAIM3080 - Deeply discounted securities: taxation: losses
Thank you. 

Dear Sir, Regarding the foreign DDS (US Bond) declaration, should it declare in SA101 (misc income) or SA106 (Foreign). If in SA106, which the box is corrected? best regards Edmund

Hi ,
 

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).  You can find SA101 at : Self Assessment: additional information (SA101)  . Thank you .

Dear Sir, As per the SIAM3080, the loss is set against the person’s income charged to income tax for the year. I found the on line self assessment Box 3 of SA101 accepts the digital greater than 1 only (not accept negative), unfortunately, my DDS is loss, how to reflect the loss or to set again my income? best regards