Oversea Bonds classification

Dear HMRC, I hold US- Company Bonds, which delivery coupon every half year, my questions: Q1, It is expected not in category of DDS, am I correct? Q2, Follow by Q1, the Accrued Income Scheme should be able to applied when preparing tax returns, Correct? Q3,When I disposal of oversea company bonds and have gains, shoould it be reported as CGT/income tax? Thx

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. 
They are taxed as income.  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): 
SA101
SAIM3010 for more information.
Accrued Income Scheme (Self Assessment helpsheet HS343), to determine if the AIS applies.
Thankyou.
 

Dear HMRC, The foreign investment the income is the difference between the purchase and redemption price report to 3 of SA101 (page Ai1), Am I correct? Do I need to provide a details trade summary for HMRC? May I ask where I should report to for the coupon recieved from the US Gov bonds? Thx

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.  

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 (2023)

You can add an attachment to the online tax return or provide additional information in the freehand box.

Thank you.

Dear HMRC, So for the US Bonds investment(DDS), I need to prepare a summary as attachment for HMRC, that calculate : 1. The difference between the purchase and redemption price.(losses cannot be deducted) 2. The accrued income profit and loss. 3. The incidental costs of acquisition and disposal. Total balance put into box 3 of SA101 (page Ai1), Do I need to report those foreign income in SA106? Thx

Hi terrywykwong

An attachent to support your figures as suggested is quite acceptable.  
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) and not SA106.  Please see Additional information (2023)

Thank you