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.
Have a look at
Savings and Investment Manual SAIM3010 - Deeply discounted securities: introduction for more information.
Thank you.