Investments with no income or capital gains tax

caldi9

Hello, are there any other investments apart from UK government bonds that (outside a sipp or isa) are free of any income or capital gains tax? Are only certain UK government bonds tax exempt?

thanks

TheGreenFrog

Rather esoteric perhaps, but QCBs are free of CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53702

Not that easy for retail investor to identify or even buy a QCB though.

lohr500

I believe UK issue gold coins (Sovereigns and Britannias) are free of any income tax and CGT.
Their investment potential is debatable though compared to others.

TheGreenFrog

I suppose premium bonds count as an investment.  No tax on the prizes.

eskbanker

caldi9 said:

Hello, are there any other investments apart from UK government bonds that (outside a sipp or isa) are free of any income or capital gains tax? Are only certain UK government bonds tax exempt?

Many make the mistake of assuming that something tax-free is better than something on which tax is payable, but of course what really matters to most is net return, so what is it that you're actually looking to achieve?

kuratowski

EIS (enterprise investment scheme) and VCT (venture capital trusts) are sometimes mentioned, but they are pretty high on the risk scale.

caldi9

eskbanker said:

caldi9 said:

Hello, are there any other investments apart from UK government bonds that (outside a sipp or isa) are free of any income or capital gains tax? Are only certain UK government bonds tax exempt?

Many make the mistake of assuming that something tax-free is better than something on which tax is payable, but of course what really matters to most is net return, so what is it that you're actually looking to achieve?

My question doesn’t imply your assumption. An investment similar to a 1- or 2-year fixed savings without any income tax ideally. Former gets you 4.5%, but that’s before taxes.

EthicsGradient

caldi9 said:

eskbanker said:

caldi9 said:

Hello, are there any other investments apart from UK government bonds that (outside a sipp or isa) are free of any income or capital gains tax? Are only certain UK government bonds tax exempt?

Many make the mistake of assuming that something tax-free is better than something on which tax is payable, but of course what really matters to most is net return, so what is it that you're actually looking to achieve?

My question doesn’t imply your assumption. An investment similar to a 1- or 2-year fixed savings without any income tax ideally. Former gets you 4.5%, but that’s before taxes.

All you have available to you is an ISA and Premium Bonds (assuming the amount you want to invest fits that). You want a short term investment with at least roughly-predictable income or capital gain, but you want it to be free from income and capital gains tax, when the idea of taxation is to tax such income. @eskbanker's point is thus relevant; you need to work out, in your situation, if going for either of those, while tax-free, is better than paying tax on these kind of investments which are taxable.

caldi9

TheGreenFrog said:

Rather esoteric perhaps, but QCBs are free of CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53702

Not that easy for retail investor to identify or even buy a QCB though.

Great idea. Are all sterling denominated bonds QCBs? Don’t brokers offer them to retail investors?

wmb194

caldi9 said:

TheGreenFrog said:

Rather esoteric perhaps, but QCBs are free of CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53702

Not that easy for retail investor to identify or even buy a QCB though.

Great idea. Are all sterling denominated bonds QCBs? Don’t brokers offer them to retail investors?

Essentially yes, when I looked into it they all appeared to qualify. I found a list somewhere with the questions you need to ask of the bond to tell whether it qualifies or not and it seemed to me that it would be rare for a bond not to.

caldi9

wmb194 said:

caldi9 said:

TheGreenFrog said:

Rather esoteric perhaps, but QCBs are free of CGT.

https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg53702

Not that easy for retail investor to identify or even buy a QCB though.

Great idea. Are all sterling denominated bonds QCBs? Don’t brokers offer them to retail investors?

Essentially yes, when I looked into it they all appeared to qualify. I found a list somewhere with the questions you need to ask of the bond to tell whether it qualifies or not and it seemed to me that it would be rare for a bond not to.

What is the issue though? High nominal value for retail investors? Would consider low yielding bonds at lower prices (unless company has apparent issues) and short-term maturities.