How are Treasury bills taxed?
Although Treasury bills have the same credit risk as gilts – they are sterling denominated unconditional obligations of the UK government – they are not classified as gilts for taxation purposes. Because of this they are covered by the taxation rules which apply to deeply discounted securities. In essence, these specify that if an instrument is issued at a discount of more than 0.5% of its redemption price, (multiplied by the period of a year represented by the maturity of the instrument) they are captured by the deep discount taxation regime. So any profit made by an individual as a result of buying this bill would be charged to income tax as income when realised (i.e. when the bill redeems or is sold on).
