CGT on bonds

[JayM]

What is the tax treatment of bonds purchased at a discount (e.g. face value 97) and held to maturity (100)? Clearly the interest portion is taxable at normal income tax levels, but I can't find information about bonds purchased at a discount which appreciate in value as they approach expiry.

 

[Tomtomtom]

Maybe the discount is treated as income too, accrued at time of purchase?

(Just going with the "what would be most painful?" principle of tax.)

 

[Mista_Mobsta]

What is the tax treatment of bonds purchased at a discount (e.g. face value 97) and held to maturity (100)? Clearly the interest portion is taxable at normal income tax levels, but I can't find information about bonds purchased at a discount which appreciate in value as they approach expiry.

AFAIK the principal appreciation portion will be treated as CGT at the maturity of the bond

 

[Snyper564]

Discounted price would be your base cost.

So if you bought at 97 and sold at 100 your CG is 3

ignoring interest portion

 

[JayM]

Maybe the discount is treated as income too, accrued at time of purchase?

(Just going with the "what would be most painful?" principle of tax.)

This is what I was thinking. You can get almost 0 coupon USD/GBP bonds for quite a discount now - it seems to good to be true.