Most Tax Efficient Gilt Today

MoneyMan01

Okay, so the coupon value, in this case 0.25% is on the £100, paid twice a year.

I guess it complicates things slightly given I am purchasing in March, with it maturing in January 2025, hence the "dirty" part of it where I need to pay the accrued interest? There is likely a calculation to work that out I presume? That being said, iWeb or Interactive Investor will be able to tell me that won't they.

Given my circumstances, am I correct in thinking that TN25 is the best, most tax efficient option then?

Hoenir

The broker will compute the accrued interest and this will be shown seperately on the purchase contract note.  Remember to account for this when declaring your interest income. As needs to be deducted in order to return a net figure.  

MoneyMan01

I currently don't do a self assessment, is that what you are referring to when you say declare interest income?

What is that about? Is that something additional I would need to do if I get a gilt?

Hoenir

I no longer have to complete self assessment. Though as some of my annual income ends up being taxable. I declare this information through my online Personal Tax Account. Onus remains on the taxpayer. 

MoneyMan01

I’ve read about the accrued interest and as far as I understand, that will show as part of my purchase. 

Is there anything I need to do with that? Specifically talking about the accrued interest I would have to pay here?

wmb194

TheDarkKnight93 said:

I’ve read about the accrued interest and as far as I understand, that will show as part of my purchase. 

Is there anything I need to do with that? Specifically talking about the accrued interest I would have to pay here?

For tax purposes you can deduct it from the next coupon payment i.e. it reduces your interest income. 

Note that if you sell the gilts before they mature you'll be paid accrued interest by the purchaser.

MoneyMan01

wmb194 said:

TheDarkKnight93 said:

I’ve read about the accrued interest and as far as I understand, that will show as part of my purchase. 

Is there anything I need to do with that? Specifically talking about the accrued interest I would have to pay here?

For tax purposes you can deduct it from the next coupon payment i.e. it reduces your interest income. 

Note that if you sell the gilts before they mature you'll be paid accrued interest by the purchaser.

How do I do that? (Deduct it from my next coupon)?

wmb194

MoneyMan01 said:

wmb194 said:

TheDarkKnight93 said:

I’ve read about the accrued interest and as far as I understand, that will show as part of my purchase. 

Is there anything I need to do with that? Specifically talking about the accrued interest I would have to pay here?

For tax purposes you can deduct it from the next coupon payment i.e. it reduces your interest income. 

Note that if you sell the gilts before they mature you'll be paid accrued interest by the purchaser.

How do I do that? (Deduct it from my next coupon)?

As part of your tax return record keeping. So e.g., £100 coupon - £20 accrued interest paid at purchase = £80 gross interest that’s declarable.

aroominyork

MoneyMan01 said:

- I buy this for £96.39 per Gilt, then this would give me £100, per gilt, on 31/01/2025, so gains of £3.61 per £100. Meaning I would have £10,361 in my account on 31/01/25?

No. A capital gain of £3.61 per £96.39. So if you invest £10,000 you would buy 10,000 / 96.39 = 103.7452 units. On maturity you would receive £10,374.52 (plus coupon).

Incidentally, although we talk about £100 par, the platforms (ii / HL) record each gilt as £1, eg I invested c.£25,000 in TG24 and it shows 25,242 units.

MoneyMan01

wmb194 said:

MoneyMan01 said:

wmb194 said:

TheDarkKnight93 said:

I’ve read about the accrued interest and as far as I understand, that will show as part of my purchase. 

Is there anything I need to do with that? Specifically talking about the accrued interest I would have to pay here?

For tax purposes you can deduct it from the next coupon payment i.e. it reduces your interest income. 

Note that if you sell the gilts before they mature you'll be paid accrued interest by the purchaser.

How do I do that? (Deduct it from my next coupon)?

As part of your tax return record keeping. So e.g., £100 coupon - £20 accrued interest paid at purchase = £80 gross interest that’s declarable.

Is a tax return record something I should be aware of and do? I've never had to do one before.