magnagatti cianch

Hi and thank you. As said in my first post I am aware of SAIM3020. In fact, the general rule is to consider a DDS if "the security can be redeemed will or may exceed the issue price by more than 0.5% for each year in the redemption period". Coming back to my examples, why example 1) should be considered a DDS?

Which conditions? I want to know why example 1 should be classed as DDS.

Good morning. Could you please clarify? The definition of DDS does not say that. SAIM3020 states: "It is a security where the amount payable on maturity, or any other occasion when the security can be redeemed will or may exceed the issue price by more than 0.5% for each year in the redemption period, up to a maximum of 30 years." The T-Note (not a T-Bill) provided as example does not fall within the definition of DDS as it was issued with a discount of 0.19% and a maturity of 5 years. Could you please explain? Unless an explanation is given, I should assume that SAIM3020 is prevalent.

SAIM3020 gives a specific definition of DDS (https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim3020). However, in may posts on this forum, it is implied that most US bonds are DDS despite not falling within the above definition. For everyone's benefit, I'd like to have some clarification using two examples. 1) US Treasury Note 0.25% 31JUL2025 - ISIN: US91282CAB72 (a real one) Coupon: 0.25% Date of issue: 31/07/2020 Issue price: 99.81 Face value: 100 Maturity date: 31/07/2025 In my interpretation this is *not* a DDS because the issue price was above 97.5 (calculated as 100 - 0.5% x 5 years). The difference between redemption/sell price and buy price will be taxed as capital gain, while the coupons are classed as interests. Could you confirm my interpretation? 2) On the other hand, assume a similar bond with Coupon: 0.25% Date of issue: 31/07/2020 Issue price: 97.00 Face value: 100 Maturity date: 31/07/2025 This is a DDS. So the difference between redemption/sell price and buy price will be taxed as income (according to own band). Could you confirm? Is the 0.25% coupon still considered as interest though? Please do not only link to the internal manual. Although your answers are not binding, they would help many of us understand HMRC position on these common cases. Thank you in advance.

Thank you. The bond I am talking about is not a DDS according to SAIM3020 as it was issued at face value. The price paid on secondary market does not seem to be relevant. Am I right? For the sake of this example, where the bond is not a DDS, what is its tax treatment?

Hi. Consider, for example, a US T-Bond with face value 100 and coupon of 2% bought at discount at 95 today 14/02/2024. Suppose that it is held to maturity date, in exactly 2 years, so 14/02/2026. 1) Does the interest incurs in the income tax as per corresponding personal band? Is it taxed when received? 2) Is the difference between the par value 100 and the buying price of 95 taxed as income? Or taxed as capital gain??? 3) May I have a link to an official document that clarifies the tax treatment of both UK and foreign bonds? Many thanks