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  • RE: US Treasury Bond gain treatment

    I think there's a bit of confusion here about the nature of certain types of US Treasury bonds. There are two kinds of fixed return US Treasury securities: short term bonds, called "T-Bills" that are typically issued with 18 months or shorter maturities, with *no* cash interest bearing coupon and are typically sold at a discount to the redemption value exceeding 0.5% per annum (ie all of the return to the holder comes from this issuance discount). These are, as I now understand it, classed as Deeply Discounted Securities by HMRC, and all of the Sterling gains would be taxable as income, and losses would be non deductible. There is however a second type of US Treasury: longer dated bonds (usually referred to a "Treasury Bonds" or "Treasury Notes"), which are sold with a (market determined) annual cash interest coupon payment, and an issuance price at or very near the redemption value (ie the annualised difference between the issuance price and redemption value is *less* than 0.5%). Given this: am I correct in thinking that for these kinds of Treasury Bonds, UK taxpayers need to pay Income tax on the cash interest payments, but capital gains tax on any Sterling difference between their purchase and sale prices (and losses on the difference between their purchase and sale prices in sterling would be deductible)? Thank you