Most Tax Efficient Gilt Today

MoneyMan01

Is there a "best time" to purchase a specific gilt? I.e. to not have to worry about all of the paying another person their accrued interest.

Basically, the question I am asking is to cut down on admin work. If I buy a gilt at the "correct" time, it would mean nothing is owed back, meaning if I don't need to do a self assessment form, I won't have to, in order to "gain back the accrued interest owed".

Do gilt's (e.g. TN25 or TG25) have a start date? If so, how do I see when is the "best" time to buy a gilt?

Side question - What is the difference between TN25 and TG25, what is the N or G denoting?

aroominyork

MoneyMan01 said:

Is there a "best time" to purchase a specific gilt? I.e. to not have to worry about all of the paying another person their accrued interest.

In my experience it works OK - they usually arrange a convenient time to arrive. Only once did they arrive during dinner but we gave him a cup of coffee and he waited until we'd finished for me to hand over the cash.

MoneyMan01

MoneyMan01 said:

Is there a "best time" to purchase a specific gilt? I.e. to not have to worry about all of the paying another person their accrued interest.

Basically, the question I am asking is to cut down on admin work. If I buy a gilt at the "correct" time, it would mean nothing is owed back, meaning if I don't need to do a self assessment form, I won't have to, in order to "gain back the accrued interest owed".

Do gilt's (e.g. TN25 or TG25) have a start date? If so, how do I see when is the "best" time to buy a gilt?

Side question - What is the difference between TN25 and TG25, what is the N or G denoting?

Could anyone advise please. Appreciate it may not be a simple answer. Just trying to learn. 

gravel_2

It's not likely to make much difference. On a low coupon gilt the price difference is pretty marginal. From a tax perspective I understand through accrued income losses the tax due on the first coupon will account for the dirty price anyway.

I would read: https://www.gov.uk/government/publications/accrued-income-scheme-hs343-self-assessment-helpsheet/hs343-accrued-income-scheme-2024

aroominyork

MoneyMan01 said:

Is there a "best time" to purchase a specific gilt? I.e. to not have to worry about all of the paying another person their accrued interest.

Basically, the question I am asking is to cut down on admin work. If I buy a gilt at the "correct" time, it would mean nothing is owed back, meaning if I don't need to do a self assessment form, I won't have to, in order to "gain back the accrued interest owed".

Unless you buy exactly on the ex-divided date (and sell on one, if before maturity) you will need to adjust for accrued interest. For example, you invest £10,000 in a 1% coupon gilt (0.5% each six months) four months after the last dividend. As well as the 'clean'/advertised price you will pay £10,000*0.5%*4/6 = £33.33. That will count as negative interest on your tax return. You will then receive £50 on the dividend/coupon date two months later, so you declare a net £16.66.

MoneyMan01 said:

Do gilt's (e.g. TN25 or TG25) have a start date? If so, how do I see when is the "best" time to buy a gilt?

Side question - What is the difference between TN25 and TG25, what is the N or G denoting?

The start date, ie when first issued, is not relevant. The date of the last and next coupon is relevant only as explained above. It's really not relevant. 

The names denote nothing. Ignore them.

MoneyMan01

Theoretically then, using T26 as an example, that shows it matures on 30/01/2026.

So, would T27 be available on 30/01/2026? Then, if so, would 30/01/2026 be the best time to purchase in terms of reducing any admin work, as in theory, my line of thinking is that their wouldn’t be a “dirty” price. You’d get both coupons in that 12 month period. Is that right?

wmb194

MoneyMan01 said:

Theoretically then, using T26 as an example, that shows it matures on 30/01/2026.

So, would T27 be available on 30/01/2026? Then, if so, would 30/01/2026 be the best time to purchase in terms of reducing any admin work, as in theory, my line of thinking is that their wouldn’t be a “dirty” price. You’d get both coupons in that 12 month period. Is that right?

*T27A? TG27? I don't understand your question but you can find the ex-dividend dates on the DMO's website (should be seven working days before the payment date).

https://www.dmo.gov.uk/data/pdfdatareport?reportCode=D1A

aroominyork

https://www.dividenddata.co.uk/uk-gilts-prices-yields.py shows the market. T26 does not mean there is an equivalent T27. 

If investing at a dirty price* (like everyone else does) concerns you, I think either you don't understand the concept or you understand it but nominal gilts are not right for you.

* Don't think of 'dirty' as a pejorative term

(Over and out.)

MoneyMan01

I was looking at it from the point of view of seeing if I can make the purchase in such a way, that it reduces the need entirely to do a self assessment form.

My theory, T26 for example matures on 30/01/2026, so on the basis that a "T27" did get launched, purchasing it on 01/02/2026 would mean you get both coupon's (2x 6 month payments), without the need of paying anyone else what they are owed, and vice versa, making things a lot cleaner. Or does it not work like that?

gravel_2

My own gilt noob question - if one were to put £10k into a low yield gilt does that trigger SA requirement or is there a less formal way to report the nominal income derived from the gilt? I know it's possible to report certain types of income via personal tax account but looking at it I'm not sure there's a natural home for gilts on there.

MoneyMan01 said:

I was looking at it from the point of view of seeing if I can make the purchase in such a way, that it reduces the need entirely to do a self assessment form.

My theory, T26 for example matures on 30/01/2026, so on the basis that a "T27" did get launched, purchasing it on 01/02/2026 would mean you get both coupon's (2x 6 month payments), without the need of paying anyone else what they are owed, and vice versa, making things a lot cleaner. Or does it not work like that?

You've already been told to ignore the numbers/tickers of the bonds. They are issued on the basis of government needs. All you can tell from them is the redemption year. These are not like bank savings accounts where one issue matures and begets another equivalent. T26 has been around since 2020 and its low coupon is a creature of the ultra-low rates from that period of time.

To get a gilt day one you have to participate in the auction. Do you know what's involved in that?