Most Tax Efficient Gilt Today

wmb194

MoneyMan01 said:

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.

Only if you meet the criteria to complete one. In this context it would be if you e.g., exceed your personal savings allowance (£1000 basic rate, £500 higher rate) through the amount of interest earned but if your affairs are simple there are other ways to pay what you owe.

https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

MoneyMan01

Got you.

I'm not even sure I have gone over my personal savings allowance.

How do I check whether I have, or how much I have in fact earnt in savings interest this tax year?

wmb194

MoneyMan01 said:

Got you.

I'm not even sure I have gone over my personal savings allowance.

How do I check whether I have, or how much I have in fact earnt in savings interest this tax year?

You go through your accounts and add it up. I use MS Money to keep track of things as I go along but you could use a spreadsheet to tally it up. If you only have a few accounts it shouldn't be too much effort.

MoneyMan01

Thanks. If it transpires that I did in fact go over the £500 yearly allowance, how do they take the tax?

Do they send you a bill you need to pay?

Come out of a pay packet (if so, would that show on the slip?)

Do they only take it once you do a self tax declaration form for the interest you earnt?

MoneyMan01

Does anyone know? Thanks in advance.

newatc

They will adjust your tax code so effectively take it from your pay packet.

MoneyMan01

So if I do the gilt option route, I would have to do a self assessment tax return? Can't I just purchase the gilts, I get paid my return, and be done with it? Won't the accrued interest be paid back to me automatically if I purchase one mid way through?

MoneyMan01

wmb194 said:

TheDarkKnight93 said:

What is the most tax efficient Gilt available today, for the shortest length of time?

I basically want to store some money until the new tax year, as I have maxed out premium bonds, and I am getting taxed 40% on what I am earning above the £500 interest.

Depending on how long you want to invest for you don't have a massive amount of choice but if very short term TG24 22/04/24?

https://www.yieldgimp.com/

Also, could someone explain to me what the "Net* (40%) and the "40% Gross Yield" columns mean?

Hoenir

MoneyMan01 said:

wmb194 said:

TheDarkKnight93 said:

What is the most tax efficient Gilt available today, for the shortest length of time?

I basically want to store some money until the new tax year, as I have maxed out premium bonds, and I am getting taxed 40% on what I am earning above the £500 interest.

Depending on how long you want to invest for you don't have a massive amount of choice but if very short term TG24 22/04/24?

https://www.yieldgimp.com/

Also, could someone explain to me what the "Net* (40%) and the "40% Gross Yield" columns mean?

There's an explanation at the bottom of the page as indicated by the numbers in the Heading of the columns, 

https://www.yieldgimp.com/

InvesterJones

MoneyMan01 said:

So if I do the gilt option route, I would have to do a self assessment tax return? Can't I just purchase the gilts, I get paid my return, and be done with it? Won't the accrued interest be paid back to me automatically if I purchase one mid way through?

You'll only need to do a SA tax return if you need to do a SA tax return. I.e. if your returns from all your investments require it. You'll be paid half the coupon rate at the next dividend date - any accrued interest will be  paid by you to the seller of the bond as compensation for them selling before the dividend date, or where accrued interest is negative, the seller will pay it to you.