Buying US treasury bonds while abroad

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gavinsiu
Posts: 4536
Joined: Sun Nov 14, 2021 11:42 am

Buying US treasury bonds while abroad

Post by gavinsiu »

If a US citizen is living in the UK, can treasury bonds be purchased without issues. what would be the cost involved? I don't think you can sign up for a treasury direct account without a US address. Are there any issue with holding US treasury Bonds like TIPS in a UK brokerage account? Would there be an issue with PFIC for example since it probably wouldn't be a PFIC?
Valuethinker
Posts: 49027
Joined: Fri May 11, 2007 11:07 am

Re: Buying US treasury bonds while abroad

Post by Valuethinker »

gavinsiu wrote: Wed Mar 08, 2023 12:17 am If a US citizen is living in the UK, can treasury bonds be purchased without issues. what would be the cost involved? I don't think you can sign up for a treasury direct account without a US address. Are there any issue with holding US treasury Bonds like TIPS in a UK brokerage account? Would there be an issue with PFIC for example since it probably wouldn't be a PFIC?
Guesses not knowledge:

- I cannot see any reason why you couldn't hold a US Treasury bond in a UK account. But you'd have to find a broker to sell you one. So you would need to make sure they will. Direct dealing in foreign securities is not a given.

- there would be no PFIC problem

- however TIPS accrue- -the amount you receive at redemption is indexed to CPI. There are special rules for gilts on that (indexed to UK RPI). For foreign inflation linked bonds, my guess is HMRC would tax that gain as income - ie you would pay it when the bond is indexed not when you get the payout (at redemption/ maturity). So you will pay it without receiving the cash to pay the tax bill

Other than in a pension, I would probably avoid TIPS on that basis. But this is a guess, not certain knowledge.
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