Tax treatment of US treasuries - accrued interest
Posted: February 7th, 2018, 3:34 pm
Hi - does anyone know about the UK tax treatment of US treasuries. My basic understanding is:
- The difference between the redemption/sale proceeds (converted to GBP at the FX at the time of sale), less the purchase cost (converted to GBP at the FX at the time of purchase) represents a capital gain/loss subject to CGT
) The coupon income, converted to GBP at the time of receipt, is subject to income tax
But what about accrued interest at the time of purchase and/or sale? My guess is the following:
- the accrued interest on purchase is deducted from the first coupon receipt (i.e. similar to Gilts)
- the accrued interest on purchase is deducted from the purchase cost to calculate CGT (like unit trust equalisation)
- the accrued interest on sale is taxed as income
- the accrued interest on sale is deducted from the sale proceeds to calculate CGT
- all these amounts are converted to GBP at the time of receipt/payment
This would seem logical, if not ridiculously complicated!
- The difference between the redemption/sale proceeds (converted to GBP at the FX at the time of sale), less the purchase cost (converted to GBP at the FX at the time of purchase) represents a capital gain/loss subject to CGT
) The coupon income, converted to GBP at the time of receipt, is subject to income tax
But what about accrued interest at the time of purchase and/or sale? My guess is the following:
- the accrued interest on purchase is deducted from the first coupon receipt (i.e. similar to Gilts)
- the accrued interest on purchase is deducted from the purchase cost to calculate CGT (like unit trust equalisation)
- the accrued interest on sale is taxed as income
- the accrued interest on sale is deducted from the sale proceeds to calculate CGT
- all these amounts are converted to GBP at the time of receipt/payment
This would seem logical, if not ridiculously complicated!